Hi: Am currently looking at low-cost rental properties (under 75k). I’ve seen some foreclosures for as low as $25-30k. Is it possible to get a mortgage for this low amount? Read somewhere that local credit unions may be willing to do this. If this is correct, would it actually be a mortgage or some sort of personal signature loan? Sorry for the dumb quesitons, but am very new to this and looking for some help. Thanks.
You will be hard pressed to find a lender that will provide a mortgage for that small of an amount. Small local banks and credit unions may, especially if you build some kind of a relationship with them.
Yes you can get smaller loans like this. They will probably be from a smaller bank. You should be able to get regular mortgages for these properties. Just expect that they’ll be set up with a fixed rate for 3-5 years, amortized over 10-20 years, require about 15-30% down, and carry a little higher interest rate than a regular mortgage for an owner occupied place. Investment properties are riskier for the bank since you’ll most likely walk away from an investment property, but keep paying on your personal residence when times get tough.
Don’t look at doing rental properties and automatically assume you can get loans for 30 yrs at 4.5% with very little money down.
I have a pre-approval from Wells Fargo for 70k’ish – 30 year mortgage with 20% down, quoted interest is about 5.5%. I’m looking forward to acquiring a cash flow property soon. However when it goes down to the 20-40k’ish range, I’m thinking those are mostly cash deals.
I’ve financed houses for 10k. Those were packaged into a bigger loan with other properties, but I have acquired plenty of single loans for 20k. It all depends on who you’re dealing with and your relationship with them.
Try your local banks or credit unions. The smaller community institutions benefit more by investing in the local community, so they are more apt to make those smaller loans!