Newbie Financing Questions

Newbie here looking to buy my first investment property. Looking to buy a condo unit for somewhere in the $40,000-$50,000 range and rent it out. I have enough cash to put 50% down at that price.

What kind of bank will finance the rest? Will typical retail banks (Chase, BoA, etc.) make mortgages on non-owner occupied/investment properties? Will they make a loan for only $20-25k?

Thanks for the help!

Check smaller “local” banks. Most of the big name banks will have so many rules in place such as not lending <50K on a property. I’ve had much better luck finding smaller loans at local banks. These loans are for the bank’s own portfolio - meaning they’re not going to sell them to some other entity. Expect a shorter amortization as well as paying a little higher interest rate. For example, I just re-fi’d my personal house at 3.5% for 30 yrs (was trying to get into a 15 yr loan, but that’s another stupid underwriting story). Recent investment deals have been at 5.65% amortized over 10 yrs (fixed for five yrs).

Thanks for the reply. So there’s not much of a chance of getting a 15 or 30 year mortgage on a small loan like this?

From my experience, banks have little to no interest in stretching that small of money on a non-owner occupied property for that many years. You may be able to get a 15 yr am, but 30 would be really tough. When I say these loans are fixed for a certain amount of years, realize they are actually set up with a balloon payment at the end of the fixed period. We just “renewed” one of our loans when the balloon payment was due. It cost $125 total to re-do the loan in house. We just had to sign new papers…relatively cheap and painless.
Take a look at what the difference in payments will be from 10 to 15 to 30 years on that small of an amount. It’s not going to be earth shattering either way and you’ll just be adding on a lot of interest by trying to stretch out to 30 yrs anyway.

With 50% down you shouldn’t have a problem getting financing, even if it is short-term financing from a hard-money lender.