I have found a niche in the "shallow end" of the real estate pool with sub30 condos and $100k +/- homes
I have been offered for purchase 3 condos - a 2/2 and two 2/1s for $80k total. I already have a condo in the same complex which I purchased from the same investor. He is scaling back as he is getting older and emailed me to see if I was interested in his other units in that complex. My unit rents for $750. 2 are occupied and rented at $700 and $750 per month with what appears to be quality tenants. The 3rd will need a tenant as the tenant moved out this weekend at lease termination. This unit was rented at $800 but it was over market and will probably rent for $750 with the next tenant.
I fret over every purchase. I have a credit union that will make in house loans (portfolio loan) on investment properties up to $120k for 10 years fixed with 30% down. I actually have a $21k mortgage with them. My problem is they won't take rental income into account until the unit is owned by me regardless of existing leases and then they take 75% of gross rent. This makes the DTI too high for a loan with them for this purchase; however, after 6 months, I can refinance and count 75% of the rent on the new purchase. I have already spoken to my banker about this option. Most banks and private lenders don't like to loan on such a low amount. I have a private lender who will give me an 18 month bridge loan with a 6 month prepayment penalty for a monthly payment of $700.
The numbers appear to work, but I have never done a bridge loan before and need some reassurance.
The property is in Columbia, SC.
@Anna Buffkin I've never done a bridge loan either so I understand the hesitation on that as well. Do you have any other collateral you could give to the credit union to make them "feel" better so you could just do the loan with them now? I know some portfolio lenders will get more flexible if you would do a CD with them for a couple of years to make them more secure.
It's been my experience that banks are willing to be creative but it's usually up to the borrower to make the suggestions. By the way, what credit union are you working with? I'm always looking for new lenders in and around Columbia.
thanks @Willgaston. Buying at this price point has always been about creativity or cash on hand. I guess I need to think outside the box a little more.
My prefered lender is Neighbors United FCU in Greenwood. I think they are also a little hesitant as I just took out a mortgage with them in September on a rental and have 22k of a 30k HELOC utilized which I used for previous purchases.
My husband and I moved to Greenwood about 5 years ago, but still chose to invest in Columbia as we know Columbia inside and out.
@Anna Buffkin Will send you a PM with a contact at Carolina Collegiate FCU on Rosewood Drive. He may be able to help you out as he is very aggressive when it comes to investment loans. If not, maybe he can point you in the right direction.
Thanks @Will Gaston .
have you asked the motivated seller if he will take short term loan such as 12 months seller financing on these? tell him you need to rehab the places up and get solid tenants before refinancing. You can even negotiate deferred first payment/interest for 2 months while you rehab and place tenants in that vacant unit. You can even offer up a nice interest rate that makes it worth his while for holding the short term paper: 6-8%, 10% maybe? show him how his income might even be similar to that he earned in cashflow without the tenant headache. thats being creative.
Thanks @jeff bridges. I asked about seller financing initially, but the seller has a partner who wants out totally to retire. The seller needs the cash to buy out his partner on a larger project he is keeping.
I'm feeling a little better about this purchase as I may have secured long term financing!
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