1st properties HELP!

[Tina Johnson]

Hello,

I have made offers on my first 2 properties (YAY!)  and both offers have been accepted (motivated seller- Husband doing rental property and he has passed away - while working on a rental)  So both properties listed for 49,000 each...then $39,000.   I offered 30,000 and 26,500 and offers accepted.   They are not in the best neighborhoods....but very decent in my opinion and both have renters.   $750 and $600.   Both are in decent shape....but could use some work....the owner was a good landlord and took care of the places.  

My dilemma

I am good with conventional financing on the $30,000 as the zestimate is $44,000.  So that will work fine.   The other one looks like it may have some minor earthquake damage a few cracks and may have shifted a little on the crawlspace foundation.   That is why the lower offer.....zestimate is around $32,000.    I can get financing at 6% for 5 years with a payment of $540.  this is what scares me ( I think this may not be the best route....if it is vacant a few months it could put a strain on me...especially with taxes and insurance).   I do not believe I can get conventional due to the loan amount.   

should I  1.  go ahead with the 5 year financing with the $540 payment 2.  try my luck at getting a rehab/conventional type loan and get it above the $30,000 minimum that the bank will finance....and finance $30,000....but I am afraid the appraisal will not get so far over....it may appraise for $35,000.....but I am not sure....and that would still not put me over $30,000 to finance with me putting down 20%.  3.   Should I take a loan from my 401K....see if they will accept maybe $24,000 or $25,000 cash.   ( I have almost $300,000 in my 401k)  

Any advice will help. 

[Dan Barli]

@Tina Johnson have you found comps to support the values besides the Zestimate? Zestimates are not always the most accurate, so you should get some comps from a local realtor. 

Are you getting this financing at 6% with a mortgage lender or is it a private lender? If you are going with option 2, check with your local lenders to see what their minimum loan amount will be. You do not want to find yourself in a position where it doesn't appraise or appraises for less than what they can do the loan on. I would not suggest you take a loan from your 401k as there are usually penalties and significant charges that can eat away at your profit.