Yesterday I put a SFH under contract for $33,000 from a bank foreclosure. Tax assessed value is $60,700. Comps put it at around $60,000. I thought I had a lender who would fund this loan, but I guess they only fund in the major cities like St. Paul and Minneapolis. Extremely disappointing.
Do loans under $50,000 in the City but not in a major cities exist?
I have called a lot of people, and even with me putting 10% down with a credit score of 720 noone can do this loan. I’m probably going to have to use a local bank. I’ll have to put 15% down ($5,000), pay the closing costs(1,000), and pay all the renovation expenses ($5,000). Plus pay all the carrying costs. Crappy!
I’m looking for a 100% loan and money for the rehab. The problem is that I can’t find anyone that will give me a loan for that low of an amount in a small town.
I have a lender that can do $30,000 purchases, roll the closing costs, and the rehab costs into the loan. He can even roll some of the mort pmts into the loan. But I found out yesterday that he can’t invest in Gilbert, MN.
Our town has a population of 20,000 and we usually buy houses under $50,000. This is how we do it. Go to the commercial department of a small local bank and get a construction type loan. If the ltv is under 80% they should have no problem funding the purchase price and rehab with no money down.
Other than that try Brookview Financial or Rehab Funding. I used to use them until I realized how much cheaper the banks were.
The banks are definitely cheaper. $3-6,000 in closing costs Vs. a small bank’s $700 closing costs. I’m flipping the property, so if I use my own money I’ll get it back in a month or two. In the end I’ll make more money if I use the small bank. So I guess it doesn’t matter if I get a 100% loan. I already have a possible buyer lined up for $65,000. It’s funny the buyer knows what I’m paying for it and that I’m putting about $5,000 in updates. Yet she’s happy to pay the $65,000.
This is a topic MANY investors on this site would like more information on. Thanks for the information and keep it coming if you think of anything else.
Wasn’t trying to slight any brokers here with my recommendations. I am guessing the aforementioned companies have changed their lending guidelines in the last couple of years. We probably have not used either one since 2003 or 2004, but at that time they would loan on anything above $30,000. Didnt need the $20,000 liquidity back then either.
Also, there are different times when we like to use a bank and times we like to use a mortgage broker. For flipping we like to use a bank, its cheap and its easier to take title in company name. If holding long term brokers give better rates over a longer fixed term. Still hard to take title in company name though. Also, we send our buyers to brokers to get their financing.
Just my 2 1/2 cents.
I hear brokers say that there are new rules that make it very difficult to give loans under $50,000. Is this true? and what is the point of any rules like this? Small banks must not have to follow these rules.