HML will not lend me such a small loan! HELP!!!( And its a DEAL!!)

Well …I think it’s a deal.
I’m bidding on a prop that is listed for 19k. I offered 12k (low balling to hard??)

Soooo…the thing is I’ve gone to several HML and they say its too low to lend on.
They only lend on 60k+

offering 3k earnest money which will be given to my agents realtor to be held in escrow when and if my offer is accepted.
The offer will be written under my name.
I estimate 20k in rehab work and 6 months of holding.

Comps are all over the place in the 50s -60s (mostly REOS)
and one house that is a model match for 100k on March 2009.

its a 2/2 but I think its 3/2 ( I viewed it but on the MLS it shows 2/2…so now im doubting myself)

Anyways…any one have any suggestions???
I don’t know anyone that has like 40k around for the deal
12k+20k (rehab)+ closing cost and stuff = 40kish

I know I dont have it under contract yet but if I do…then what!!!

Try every small local banks, hard money lender, even try credit cards, or The best is private money. You said you do not know anyone with 40K, just ask everyone you know but say to them, “Not that you would be interested, but do you know anyone who would like double digit returns on their money backed by real estate”? 2 keys, do not answer questions rather get the face to face meeting and you are not asking for money you are inviting people to make great returns on their money.

Also try your local REIClubs, Chamber and anyone in the real estate industry. You may be able to wholesale the deal to other rehabbers in the area.

Well Ive spoke to another HML and when I tell them the asking price is 19k they basically laugh and say oh that house is crap its not worth anything then if its selling so low.

So Im dumbfounded. :anon

Am I seeing gold and others bronze!?
I even told one of them ill send you pictures so you can see the house that it really is in great shape and not some dump but they turn a deaf ear to me.

So I guess private investors is the way to go.

HML do not like to make loans on properties that are in bad areas or are otherwise difficult to resell. If your HMLs are telling you they don’t want to do the deal you ought to reconsider doing it as well. HMLs do not like risky deals…neither should you.

Good luck!

Well no more worries since today it got an accepted offer …higher than asking price.
So maybe it was for the best. It’s now someone elses headache.
Thanks for the input.


perhaps you were correct in your evaluation of the deal, but in this situation, the tail wags the dog. If you were a HML, think about the deal you are referring to. If you were to borrow 30k and the HML is charging you 5 pts, the fee to the HML is only 1500. They may feel that doing the legwork on the deal, evaluating it, and taking the risk isn’t worth the 1500 profit to themselves. A better idea here might be as one member suggested, to find another source of capital for a deal of this size. By the way, what market are you in? I am in Baltimore, and this kind of a deal sounds mediocre. Are the properties selling quickly at your suggested ARV price? If they are moving quickly than perhaps this is not a bad deal, but we have a glut of properties in this range.

If there is a BB&T in your area go by and talk with them.

Im in southern california. And 19k is not the norm. They are usually at 40-50k that I have seen in Desert Hot Springs. everywhere else they are at 70k+

On the next deal you do you could always offer the seller $2,000 down and the $10,000 in 12 months. At this point you could sell it to homeowner who wants to do the repairs for $45,000. Where they will give you $3,500 down, $500 a month interest only and the $21,500 in 6 months. The profit would be $45,000 minus $12,000 equaling $33,000 plus $500 times the 6 payments equaling $3,000. So total profit would be $36,000. This is just another way to get in and out of a deal with no money and no private investor and no costly repairs.

Problem is, the lender, whether a bank or HML, has the same amount of work on a 20K loan as a 500K loan. And of course the 500K loan has more potentional.

HML actually lend on the basis you will fail and they will be getting a property at a great price.

So when HML say walk, walk usually. Many really know the area if it is a local HML.

I’m going to respectfully disagree with Yrush, hard money does not lend with the hopes that you fail. In fact a good exit stratagy is very important to us.