Types of financing availble for low LTV?


I have a unique situation. In 2002, I sold my house and left the US to live overseas. Until that point I had a mortgage, credit cards and had never missed a payment.

Living overseas, I never used my credit cards, so I cancelled them. I also rented, so no mortgage. I also invested in real estate and did well, leaving me with about $70,000 when I returned to the US a couple weeks ago.

I am looking to buy an investment property. I’ve located a duplex that costs $40,000 and needs between $12,000 (best case) and $20,000 (worst case) worth of rehab. Projected rents are conservatively estimated at $1700/mo.

I would like to buy the property with cash, begin rehab, get it appraised once essential repairs (roof and plumbing) are made, and get a loan of about $20,000 to $30,000 and then complete the rehab and keep a healthy reserve. Comps are between $80,000 and $100,000. I would expect that this property would appraise for at least $70,000 after essential repairs were completed (before cosmetic upgrades were performed).

That would give me an LTV of 28%-42%. I’m ok to pay a bit higher rate for a loan if needed, but given the low LTV, I should think I could find something a bit more competitive. All banks/lenders have basically given me a flat “no” based on my lack of credit for the past 9 years.

Despite the fact that there’s a good chance I could do this with no loans, that leaves me with low (or zero) reserves and not building any new credit. I’m ok with a hard money loan if it can go on my credit record, but I don’t think it does.

I have applied for secured credit cards and just started using them.

The property is located in Montgomery County, PA. I will probably be an occupant at the time of loan application, but do not plan to be an occupant long-term.

I’d like to know what people think are the best options for my situation.


Let me add one thing to my question. I will be buying the property through an LLC which I recently set up with me and my wife. She also has no credit history.

If I were to add someone to the list of owners of the LLC who has a good credit rating and he backed the loan, would that help?

I had asked lenders already about the idea of having him co-sign for the loan. They had said that given my lack of history, he would need to be the primary borrower, and that I would be secondary and it would not appear on my rating.


You will find it hard, if not impossible to conventionally finance a property through an newly created LLC. You will have better luck buying the property in one of your names then putting it in the LLC later. Incidentally, why do you need an LLC? Have you investigated an FHA 203K loan? With a 203K you could fund purchase and rehab costs as long as the property is owner occupied. You have to live there for at least a year. A hard money lender will fund a rehab through an LLC but not if it is owner occupied.



We’ve formed an LLC because this is a duplex and it will be a rental property- so for liability reasons. We plan to live in it only during the rehab and then move out when that’s finished and we find renters. We will not be living in it longer than 4 months (we have another overseas assignment in January).