Minimum Mortgage Amounts For Refinancing-Section 8

[Brian Willie]

Hi everyone! I'm exploring investing in properties to place in the Section 8 program. These would most likely be $80K maybe less. A few quick questions please:

1) Are there lenders who will refinance these down the line since the amount would be fairly low? 

2) Do these lower dollar homes tend to appreciate at the same rate as other higher dollar homes to where it's possible to do a cash out refi? 

Thanks!

[Travis Biziorek]

Hey Brian, I have a lot of experience in this area.

I invest primarily in Detroit for myself as well as help others do the same. I was involved in over 200 deals there this year alone.

Yes, there are lenders that will finance these properties. Usually you need the LTV to be at least $75,000. Still, it will be hard finding a lender but they do exist. A couple years ago you could do smaller loans (my smallest is a $30,000 loan) but with higher rates they generally need to be above the $75,000 figure.

In terms of appreciation, it really depends. If you're buying in a rural part of Alabama you are unlikely to see much in terms of appreciation. The same is probably true for parts of Chicago, etc.

And this is why I like the Detroit market so much. The city is undergoing massive revitalization. And those that take the time to understand it will benefit. As a result, I've seen a ton of appreciation with my portfolio. 

But you need to understand the market and where you're buying. Often I'm seeing these C Class neighborhoods rapidly improve and flip to B Class. That's generally how you're going to get appreciation with this sort of strategy.