Where to find Hard Money Lenders who Lend under 40k?

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Where to find Hard Money Lenders who Lend under 40k?

Gerald Harris
Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes

I have used hard money lending in the past to buy and sell deals. In the State of California, it's different. Prices are much high than the rest o the country.

I currently live in the Charlotte NC area. Many of these homes are going for as low as 20k in some areas. Besides calling craigslist ads, where would I find hard money for loans under 40k?

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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
12y

Have you looked at P2P lending? I used that for loans in the $20k - $30k range.

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  • Stephen Watkins
    Joplin, MO · Member since 2013 · 32 posts · 0 votes
    12y

    I'm in the same boat I'm usually all in at 50k and no one wants to mess with that or less.

    0Reply
  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    I remember back in California I was told that the money that is made on the loan is so minimal under 50k that most hard money lenders won't touch the deal. Almost like I have to find a private lender to do small deal with.

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    12y

    Find a private lender. My advice is to keep the LTV as low as possible to make the deal attractive for the lender. I understand why HML wouldn't bother. If you have history, along with good deals and low LTV you should be able to get financed.

    At < $40K... you are looking at financing comparable to a car. I assume the mobile homes are similar, but I haven't financed cars or mobile homes... just talking theoretical. The deal should speak for itself.

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  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    12y

    I use private lenders, or smaller rehab lenders, you should be able to find a few lenders at a local reia group if you ask around.

    0Reply
  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Thanks guys

    "the deal should speak for itself" i like that.

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  • Ahmed Porter
    Contractor · washington, Washington D.C. · Member since 2011 · 204 posts · 64 votes
    12y

    I was in that area for the holidays and are the deals you looking at are they 40K purchase and rehab or just a acquisition ?What are the # reflection in the area or the hold long term short term or flip?40K will be real hard to get a hard money person to move on you may have better luck with putting a deal together and getting a partner but try to have some skin in the game if possible will help your chances alot more.

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    Have you looked at P2P lending? I used that for loans in the $20k - $30k range.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    If the company is an HML that uses other people's money then they make money usually off the points charged and pay the loan interest to their investors.

    If it's a small private investor or HML person they usually have XX number of funds and then run out for awhile until they can churn again.

    The problem with the lower end deals is the HML has to keep up with more properties than lending on larger deals. The other thing is the lower return and quality of the asset in general. In some states the legal process would take a lot of time and money to get the defaulted asset back. If in a more questionable area the asset could be severely diminished in value and the HML takes a loss.

    I guess it would depend on the make up of what you are rehabbing and where it is located for risk. I have seen some HML's do under 50k but they charge a lot to do it. They charge a minimum fee of XX say 4,000 upfront and then 18% etc.

    This is why private money is likely better for you to find.

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  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Hey Dawn

    Could you please break down 1 of your deals that you put together using P2P Lending? This looks to be a creative way of financing a project.

    1Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    Discussion of specific lenders needs to go into the Marketplace forum.

    0Reply
  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    My apologies

    0Reply
  • Raymond B.
    FL · Member since 2009 · 2k+ posts · 357 votes
    12y

    @Gerald Harris,

    I'll summon @Dawn Anastasi. More than likely, she will answer your question. She is a very helpful Contributor to this site.

    Raymond

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  • Steven Burrows
    Beacon, NY · Member since 2013 · 41 posts · 6 votes
    12y

    Gerald - Have you thought about partnering up. What type of properties are these only costing 20K?

    0Reply
  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Houses. 2br/1ba. some are 3br/1ba. I had a duplex in the next city in Concord NC for 9k with 20k in fix up. Some are 3br/2ba. Its like that here in Charlotte. I even come across properties that are as low as 20k that are already rented and cash flowing for 500 to 650 per mo. it just depends. The areas are Charlotte, Concord, Gastonia, Kannapolis, Salisbury........basically within a 30 mile radius of Charlotte

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  • David Beard
    Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    12y

    @Gerald Harris - HML's want to be out of the deal in 9 mths typically. Some will do nicer buy&hold if the borrower is pre-approved for conventional financing (and just needs to get the property rehabbed prior to the refinance).

    Getting multi-year private money on low end property is very difficult. I have made some of these $20k loans, at 20% interest, for 4 year terms, in my SD401k, and have been very pleased, though I've only loaned to property managers and very experienced investors in my local market who just don't have cash available. I'm not aware of anyone else doing this, though I continue to think it's a great market. I'd be thrilled to own any of these homes if I had to take them back.

    Visio Financial Services (Econohomes) offers a loan product at a similar rate of interest for a 5 year term, with stiff fees and lower LTV. You can check that out, though the terms are harsh and you won't cash flow (probably negative CF) until after the loan is paid off, but for some it's worth it to grab up cheap inventory.

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    12y

    @Gerald Harris Are these flip properties or buy/hold properties?

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  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Both. I have contracts for no more than 60 to 90 days. Tie them up for $10, run title, but my issue in the past has been most of my calls have been from other wholesalers. Maybe my other issue is just getting better pricing on my deals and their location in the Cities i mentioned above.

    I had 2 houses in Shelby, NC that i could not move to an investor. This was about 4 months ago. Shelby is about 1 hour from Charlotte. Had to houses on 2 lots. ARV for both was 100k. I had a contract on both for 25k. I wanted to wholesale for 30k. Needed 30k in fix up. Total rents for larger house was 650mo. Smaller house. 350mo. Whether you you want to fix or flip or buy and hold the deal made sense. Investor would have been into the deal at 60k. 65k max.

    My mistake was i should have contacted a local agent to send me cash transactions around that property for the last 90 to 180 days. I could have mailed the buyers and moved it. I didn't know then, now I know

    Thanks to Bigger Pockets..

    1Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    @Gerald Harris

    Example 1:

    Purchase price $24,000

    Rehab needed $15,000

    P2P loan for $30,000

    Remainder for rehab came out of my pocket.

    Rented for $1100/month

    Example 2:

    Purchase price $23,000

    Rehab needed $1600

    P2P loan for $18,000

    Balance came out of my pocket.

    Rented for $875/month

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  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    12y

    I'd be careful going to Gastonia, Concord, Shelby, Statesville, Salisbury, etc. Values change there..parts of Concord look like Detroit.

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  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    I attend Church in Concord NC. You are correct, many of these areas are sensitive to location. Even parts of Charlotte are. I had a couple of deals in the 28208 Zip code that no one wanted to touch. I see why now.

    When i lived in California, this was true as well. There are areas of Los Angeles that noone would want to touch. Real Estate is still about location, location, location. I have a friend of mine that live in a part of Concord that looks similar to the Highland creek area of Charlotte. Nice.

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  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Hey Dawn

    Thank you for the examples. Nice returns with strong rental rates. These are great. My question is what interest rate are you paying with the P2P Lending? How long is the repayment or loan term?

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y

    @Gerald Harris

    Your rates depend on your credit score and DTI ratio.

    Mine were less than 8%.

    Terms can be 3 years or 5 years. The longer the term, the higher the rate.

    I went with 3 year terms.

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  • Gerald Harris
    OP
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    That's great dawn. obviously the properties supported the returns. I am looking to do the same here in the Charlotte and outlying areas. There are alot of cheap properties in decent area that have have been neglected for years.

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  • Jerry M.
    Investor · Smithfield, NC · Member since 2014 · 69 posts · 8 votes
    12y

    last time I check nc will not allow you to use p2p lending. For what ever reason the company's offering p2p can not get approved in nc. 

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  • Mike Alder
    Investor · Willoughby, OH · Member since 2014 · 126 posts · 51 votes
    12y

    @Gerald Harris 

      I invest using private and hard money lenders in Cleveland Ohio for most of my transactions. I've had similar situations with lenders not wanting to fund smaller deals as I'm in a $20k market as well. If there is a lot of "juice" in the deal for you then ask your lender if they would fund your deal for an extra point or two on the back end. After one successful transaction in your new marketplace i'm sure they will continue to fund smaller priced deals.

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