Are there lenders with super low minimum borrowing amounts? <$20k

[Mark I.]

I can find private and HML sources all day long but the issue I consistently run into is the minimum loan amounts exceed what is needed and the value or purchase price of the properties.

Does anyone know of lenders that will finance/re-finance amounts between $5k and $20k? Particularly helpful if they will loan directly to LLC that holds the current properties.

I appreciate the feedback!

[Mark I.]

Thanks @Account Closed. Have found several that do lend to LLC for residential non-OO properties but again their minimums are typically at least $100k. I should also specify these are for Illinois and Michigan. Also, properties to refi are clear.

[Roman M.]

Most private lenders want to make at least $5,000 per year on each loan. it takes great amount of time to evaluate a deal. Also foreclosure cost if borrower doesn't pay may be as high as 25% of the loan amount.

If you can figure a way for lender to make at least $5,000 on the loan and cap their foreclosure cost then you will find one to lend you the money.

[Jay Hinrichs]

quick answer is no... as stated above there is no money in those deals.. risk out weighs any possible gain on ultra low asset loans.

low value assets are the bane of the financial markets.. with 100% wipe outs common

[Chris Mason]

Credit card.

Even if you found a lender to do it, flat closing costs would be a ridiculous % of loan amount.

A flat $1500 origination fee is mathematically identical to 30 points upfront on a $5k loan. Not 3 points, THIRTY points. 

The first step if you want cost effective mortgage money in those smaller amounts is to dismantle the CFPB, repeal Dodd-Frank, and then we'll talk. 

[Mark I.]

I just find it shocking that I can go to a brick and mortar bank and walk out with a personal 20k unsecured loan with a signature and no points or costs but can't find a lender to loan an LLC 20k secured by a 30k property.

Maybe I should be working on becoming a lender like that and corner the market.

[Dan Schwartz]

So why not take that $20K personal loan, turn around and loan it to your LLC, e voila?!

[Mark I.]

Already have. Want more.

[Calvin Thomas]

AIMLoan.com might be an option.

[Mark I.]

@Calvin Thomas Landing page states minimum loan amount is $60,000 but thanks!

[Andrew Johnson]

Mark I. I don't know if $5K is hyperbolic of literal in terms of an "ask" but I can't imagine any lender (bank or HML) wanting that business. Or, more likely, someone will lend you the money but you're going to hate their terms. Plus, just in general, I don't know if a real estate investor that can't come up with $5K on their own would be considered "low risk". If that amount of liquidity is a struggle I couldn't help but wonder what would happen if a cap-ex hit came. Lenders already don't "want" the asset that backs the loan, they (including HML) would probably want it far less if it were a $30K property.

I know, a lot of sweeping generalizations, but I haven't run across a $5K REI loan product.

[Mark I.]

@Andrew Johnson I guess I can see it from that perspective but that means funding for homes in areas where the common prices are under $50k (perfectly habitable properties) must be difficult, even for OO use.

I guess my annoyance is I can take $40k and put down for a $200k house, why can't I use $40k towards $200k worth of $40k houses?

[Steve Vaughan]

I wouldn't bother underwriting a $20k mortgage loan to myself. Too much time, pain, risk. RESPA, CFPB, Dodd-Frank as mentioned. TIL, HUD settlement, Note, DofT, appraisal, lender's insurance, title insurance, recording, on and on. That's why you can get one on a car, bike, boat, signature, but not RE.

One $200k house = above 1x.  You are talking about dancing to all above 5x.  At what rate?  Still wanting coventional rates with 1% origination @Mark I.?  30-yr loans at $42/mo?  

[Andrew Johnson]

Mark I. Maybe another way to look at it is even if you *could* find a lender, it wouldn't make sense for you to do it. The appraisal cost for an SFR isn't proportional to the loan amount, neither are title checks, or any of the other "standard" things that go into a loan closing. Let's say the appraisal costs $400 and the loan is for $5K. Do you really want to pay 8% of the loan amount for the appraisal? In your $200K example it's still $400 for the appraisal but this time it's for a $160K mortgage. Now it's .25% for that necessary appraisal fee. If you tried to make it proportional you'd have to an appraiser willing to do an appraisal for $12.50. Which, of course, isn't going to happen.

[Mark I.]

What about using the property as collateral for a line of credit? Would that be easier than being a true mortgage?

[Chris Mason]

Originally posted by @Mark I.:

What about using the property as collateral for a line of credit? Would that be easier than being a true mortgage?

 If the property is the collateral and it's borrowed money and you're getting it from a financial institution, then it's a mortgage and all the Dodd-Frank crap comes into play. 

Your cousin or friend, etc, is a different story. If your buddy wants to lend you $5k and be assured you will pay him back, a title company near you will draw up the paperwork for some flat fees.

[Mark I.]

ok I'm starting to get a better idea about all of this. If the lender is a chartered entity they're basically not going to be able to do anything for me, private lenders will want massive points and rates and short terms. I'm going to find a way to make this work yet.

Thinking totally outside the box here: collateral is a signed option for the lender to purchase the property for $10 (if loan isn't repaid)