Financing Options on First Rental Property

[Account Closed]

Hey everybody, my name is Kevin Sun and I am a student at Rice University looking for some advice.

Recently, 2 partners and I purchased our first rental property out in Beach City, TX. It is a 3/2 manufactured home with ~1000sqft, and a 6600 sqft lot with a waterfront view in a very expensive neighborhood. Recently sold comps (other manufactured homes) with much larger lots but similar build have sold for 120-140k in the area. The interior was rehabbed in 2023, and me and my partners rehabbed the electrical, plumbing, roofing, and septic (In short, it is in very good rental condition). There have been good tenants in the property for a year, and they are currently paying 1250/mnth in rent and we bought the property for 85k, and after our small rehab and closing costs we are all in for 95k. Cap rate is ~15%, but we want to build a portfolio as we continue learning so we are trying to get our cash back out.

Our key issue is that we purchased the home and did the rehab in cash, and we are now struggling to find methods to get our cash back out. Lenders do not want to give us a DSCR because they have minimums set at 100k, and conventional is difficult because our insurance policies never exceed 30k because it is a manufactured home. We are looking for a way to pull as much cash out of the property as possible and need some advice. Cashflow is over double what any mortgage would be on a reasonable interest rate, and we also have a cosigner available for a conventional. If any of you know any lenders that would consider this, we would appreciate any help getting connected at all. Thanks a ton!

[Jay Thomas]

Hey there, partner! You're doing great with your property deal – solid purchase, strong cash flow, and a good attitude toward learning. Now, about the cash-out challenge: lenders often have rules, and your property might fall short. Also, manufactured homes face stricter insurance rules, making traditional loans tricky. Consider these solutions: HELOC (Home Equity Line of Credit) if you've built up equity, a HELOC lets you access cash, but rates might be higher. Portfolio lender specialized lenders might help, but rates could be higher. Subject-to financing a bit complex, but it involves the buyer taking over payments. And wait and refinance as time passes and your property value goes up, refinancing might get easier.