Funds for deals that are below lending requirements

[Cesar Schira]

I have two deals under contract in my local market in Georgia. Deal 1- $75k asking price, ARV $98k rent: low end $900 high end $1100. No repairs needed recently remodeled by the owner. Deal 2- $55k asking price, ARV $90k rent: low end $850 high end $1000, needs $10k in repairs and upgrades. They are both from the same owner, willing to sell individually or together for a total of $125,000. The houses are located in a military town were the is constant demand for rental properties. Now the downside, my credit is a little below to ask for a conventional loan so I was rejected, hard money lenders are asking for a minimum loan amount of $75k, after paying down payments they won't qualify for their minimum, they can do a dual collateral(portfolio loan) but it takes more money and more time and i don't have either of those. I gathered as much private and personal funds as i could but still not enough, the seller won't take any long-term agreement for payments (both houses are free and clear) he will give me an only a year to pay the total of $125,000 but he wants big payments every month, and i can't possibly afford that. I have tenants on my list waiting for those houses. How can i make this work?

[Nghi Le]

There are lenders that will do $50k loans and below.  How much cash do you have in the bank?  What you're saying suggests that you don't have very much liquidity right now.

If you're using hard money to finance it, the property that doesn't need any repair will require a higher down payment than the one that does.  Can you afford a 15-20% down payment?

Also concerned about your exit strategy (to pay off the hard money lender).  If you can't qualify for a conventional loan right now, what are you going to do to ensure that you will be able to refinance out later on?  There are asset-based long-term loans out there, but that might not work since they typically have higher loan minimums than conventional banks.

If the seller is willing to seller finance without asking for down payment, that may be your best option if you have low cash.  But still have to figure out your exit strategy before getting yourself in the deal.

You could try to find a partner to provide the capital or credit that you need to get this deal done.