Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Private Lending & Conventional Mortgage Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago, 06/10/2017

User Stats

46
Posts
12
Votes
Mark I.
  • Rental Property Investor
  • Mount Prospect, IL
12
Votes |
46
Posts

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

Mark I.
  • Rental Property Investor
  • Mount Prospect, IL
Posted

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!

User Stats

46
Posts
12
Votes
Mark I.
  • Rental Property Investor
  • Mount Prospect, IL
12
Votes |
46
Posts
Mark I.
  • Rental Property Investor
  • Mount Prospect, IL
Replied

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.

User Stats

486
Posts
214
Votes
Roman M.
  • Investor
  • Miami Beach, FL
214
Votes |
486
Posts
Roman M.
  • Investor
  • Miami Beach, FL
Replied

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.

BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes

User Stats

42,060
Posts
61,878
Votes
Jay Hinrichs
Professional Services
Pro Member
#4 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
61,878
Votes |
42,060
Posts
Jay Hinrichs
Professional Services
Pro Member
#4 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
Replied

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

business profile image
JLH Capital Partners
0.0 star
0 Reviews

User Stats

9,924
Posts
10,775
Votes
Chris Mason
Pro Member
  • Lender
  • California
10,775
Votes |
9,924
Posts
Chris Mason
Pro Member
  • Lender
  • California
ModeratorReplied

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. 

  • Chris Mason
  • User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

    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.

    User Stats

    871
    Posts
    646
    Votes
    Dan Schwartz
    • Real Estate Investor
    • Tempe, AZ
    646
    Votes |
    871
    Posts
    Dan Schwartz
    • Real Estate Investor
    • Tempe, AZ
    Replied

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

    User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

    Already have. Want more.

    User Stats

    692
    Posts
    587
    Votes
    Calvin Thomas
    • Developer
    • New York City, NY
    587
    Votes |
    692
    Posts
    Calvin Thomas
    • Developer
    • New York City, NY
    Replied

    AIMLoan.com might be an option.

    User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

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

    User Stats

    3,286
    Posts
    3,786
    Votes
    Andrew Johnson
    • Real Estate Investor
    • Encinitas, CA
    3,786
    Votes |
    3,286
    Posts
    Andrew Johnson
    • Real Estate Investor
    • Encinitas, CA
    Replied

    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.

    User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

    @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?

    User Stats

    10,239
    Posts
    16,092
    Votes
    Steve Vaughan#1 Personal Finance Contributor
    • Rental Property Investor
    • East Wenatchee, WA
    16,092
    Votes |
    10,239
    Posts
    Steve Vaughan#1 Personal Finance Contributor
    • Rental Property Investor
    • East Wenatchee, WA
    Replied

    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?  

    BiggerPockets logo
    Join Our Private Community for Passive Investors
    |
    BiggerPockets
    Get first-hand insights and real sponsor reviews from other investors

    User Stats

    3,286
    Posts
    3,786
    Votes
    Andrew Johnson
    • Real Estate Investor
    • Encinitas, CA
    3,786
    Votes |
    3,286
    Posts
    Andrew Johnson
    • Real Estate Investor
    • Encinitas, CA
    Replied

    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.

    User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

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

    User Stats

    9,924
    Posts
    10,775
    Votes
    Chris Mason
    Pro Member
    • Lender
    • California
    10,775
    Votes |
    9,924
    Posts
    Chris Mason
    Pro Member
    • Lender
    • California
    ModeratorReplied
    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.

  • Chris Mason
  • User Stats

    46
    Posts
    12
    Votes
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    12
    Votes |
    46
    Posts
    Mark I.
    • Rental Property Investor
    • Mount Prospect, IL
    Replied

    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)