Lost with Financing

[Emmanuel Oyana]

Good Evening BP, 

As the title says I am a little lost with this what my next steps would be here, a little back story, I have been looking to get into long term rental properties and the financing has always been the issue. My market in Philadelphia brings properties like the one below, which I believe would be a no brainer. (ex small to sometimes no work to get to rent ready, and per section 8 rent would be around 1600 in the areas I'm looking) the issue I run into is how do I locate the financing. I have access to 30k in a HELOC, but have been unsuccessful in finding financing which makes me believe I'm looking in the wrong places. Banks won't lend without a higher all in amount, and hard money often says the project is too small? is there something I'm doing wrong, or is there a different way I should be pitching this type of project. Pointing me in the right direction would be all I need. Thanks in advance.

https://www.redfin.com/PA/Phil...

The example property is listed at 120k, with fully rehabbed properties going for around 150-160k, 

would need maybe 20-30k of work, 

and would rent for 1600 a month.

property taxes are around 1500

[Michael Anderson]

Quote from @Emmanuel Oyana:

Quote from @Michael Anderson:

Quote from @Emmanuel Oyana:

Good Evening BP, 

As the title says I am a little lost with this what my next steps would be here, a little back story, I have been looking to get into long term rental properties and the financing has always been the issue. My market in Philadelphia brings properties like the one below, which I believe would be a no brainer. (ex small to sometimes no work to get to rent ready, and per section 8 rent would be around 1600 in the areas I'm looking) the issue I run into is how do I locate the financing. I have access to 30k in a HELOC, but have been unsuccessful in finding financing which makes me believe I'm looking in the wrong places. Banks won't lend without a higher all in amount, and hard money often says the project is too small? is there something I'm doing wrong, or is there a different way I should be pitching this type of project. Pointing me in the right direction would be all I need. Thanks in advance.

https://www.redfin.com/PA/Phil...

The example property is listed at 120k, with fully rehabbed properties going for around 150-160k, 

would need maybe 20-30k of work, 

and would rent for 1600 a month.

property taxes are around 1500

I rehab a lot of properties in Gloucester City which is right on the other side of the Walt Whitman bridge, so I am very familiar with these types of rehabs. You are on the right track, but the reason hard money lenders don't want this deal is because there's not a lot of equity in it. Which is why they are telling you you need more money to bring to the table. 120k PP with 30K rehab and 150K ARV is not going to get you the maximum funding from hard money. If you have a stronger deal... example 75k PP, 30k Rehab 150k ARV, you will see the hard money lender will fund it with you bringing much less to the table. You can of course do this deal as is, but the HML will require you to bring more money to the table to make up for the lack of equity build opportunity there.

You are on the right track, but keep looking. The deals are out there.

Thank you, this gives me a better idea of where I should be. I was beginning to get the impression that I needed to pick a higher price point with the same percentage spread and maybe then I would get a working response from a HML. I'll continue to be on the lookout for deals closer to those numbers.

Nope. Don't jump higher till you figure out the formula at those entry level price points. I alway tell people... If you find the right deal, the money will find you.