Hello all.
I am looking at purchasing my first investment property. Anywhere from 2-6 units, little to no work to make it rent-able, want to keep the price under 75k. I learned from reading here never to fall in love with a deal because there is one better. I have found that very true.
I plan to have a property manager do the day to day operations of the property. Since I travel away a lot for work. Any repairs needed would be done by a friend of mine, my dad, or contracted out. I have already talked with a few managers in the area to get prices and input from them. I also talked with my insurance agent, so I have an estimate on what that would cost.
My credit is good, 740+, have 10k to cover down payment/ closing costs. I have been talking to a few banks around the area I plan to buy. Everyone says yes, we can do the deal but we don’t finance less than 80k purchase price with 20-25% down with $1500 closing cost.
I have also talked to a few other banks that are holding homes. They are willing to finance anything they are holding, but am finding a few that are not bank owned that would work for my situation.
My question to you guys is, is there any other financing options for say a 2 unit that runs 30k or a 6 unit that runs 70k. I know anything over 4 units are considered commercial with most people. I have not talked to any banks about 5+ units yet.
You can try to see if the current owner will carry 20% of the purchase price (obviously if you’re looking at something that’s not bank owned), but your bank may want to see you have money in the deal no matter what. When we started, we had to put 25% down. Our financing options got much better after we had an established track record. You could also try to get a loan from family or a friend and set that up in a 2nd position to the mortgage.
Talk to local banks. They should be more flexible rather than just telling you they don’t loan on smaller amounts of money.
You may just have to start with a smaller place or SFH to get started. You are right about the commercial side. 5 units or more will fall under commercial lending standards. Expect to put more down and have a little higher rate on these loans as well as a shorter term.
OKAY there is all so the possible way if you can /or would be able to get it funded with a bank or finance company in 30 days ? You could do transactional 30 day funding and this would allow you to not have to pass on the deal
I do not need quick money. I have a few that I have found to be “deals” but nothing that I will die if I cant get. I am trying to take my time, sit back and watch and learn a bit. I plan on purchasing around the first of the year if I can find a deal.
Okay thats good was just putting the option out there
Problem is for the bank the same amount of work goes into a 30K loan as a 200K loan. So they want to be compensated for all the work (like the TARP money is not enough)
How about credit cards? I remember when I used my Chase Visa with a 100K limit to finance some deals, has no interest for 12 months and my card has a locked rate of 5.9% so i never complained about the interest rate, at times was way better than bank and no points and low closing cost since cash deal really. Of course equity lines are gone, but you maybe able to refi in 1 year. Not a broker but sure one on here can chime in on refi rules now