Where is everyone getting these 50K personal loans?

Question

Hey All,

I'm looking to move to a nicer area and hope to turn the next SFH I purchase into a rental. Due to this I already target certain homes in terms of square footage and bedrooms ect. Anyways some of my best options in the area are houses that are failed remodels. People bought them, removed the kitchen and bathroom and quit for whatever reason. These home could be purchased at a price that makes sense for be but I would need all cash because you can't get a conventional loan on that type of property. Due to this my first thought was to get a personal loan. However I would need about 50k in conjunction with the cash I already have. Sadly most of the personal loans I am seeing from large banks are only for a max of 35K. Is it possible to just get 2 of these loans or are there other lenders I need to look at. Any additional options I should consider? Thanks!

Tom S. · Answer

@Kyle Surprenant  I think you would just have to call around and see if you could get an approval.  Personally for me, credit score was only one component.  They looked a lot at: experience, any debts settled in the past for less than owed, income, tax returns, and cash reserves.

Megan Phillips · Answer

@Tom S. any recommendations for VT banks that you've had a good relationship with doing rehab/forelcosure but going to hold into for long term rental?

Kyle Surprenant · Answer

@Tom S. Hey thanks,  nothing wrong with making a few calls and trips to lenders. Appreciate the advice!

Tom S. · Answer

@Megan Phillips  I've had good luck with Union Bank and Bar Harbor Bank &Trust.  Chittenden Bank in the past too (not sure if they still exist).   I've heard Northfield Savings bank and North Country were good too but haven't personally dealt with them.

- Tom

Kyle Surprenant · Answer

Hey @Tom S. I was recently working with a credit union to get a conventional loan. That deal fell apart when the sell refused to close. That issue is neither here nor there but my point is that I am comfortable working with these kinds of entities. Currently I have one rental which is doing well. It is stored in an LLC and has accrued some equity. At this time I live with my brothers for free. Because of this I have no debt in the eyes of banks. (its a lot to explain but the rental was quick claimed into my LLC but the mortgage is not in my name)  My credit score is 745.

Would a credit union or portfolio lender consider giving a person like me a commercial loan if the income from my rental has not been reported on taxes because it is only 10 months old and I intend to use my next property as sort of a live-in-flip-rent?

Thanks!

Tom S. · Answer

@Kyle Surprenant  If you looking to fix up homes that conventional lenders can't lend on due to condition, and plan to keep them as a rental, definitely look to portfolio lenders: smaller banks and credit unions in your area.  It will most likely be commercial (even for SFR), because of the terms, prob 15-20 amortization max. But probably in the 5.5-7% interest rate range, and the key is longer term.

Commercial loans for 1-4 units, for me at least, means they keep the loan in house, and still will look mainly at your personal financials and require a personal guarantee.  But it's a good fit to rehab and keep houses long term, without the high points and interest rates, and short terms of HML.

Good luck!

Kyle Surprenant · Answer

You know what I just found out that Citizens Bank is offering 50k personal loans. I wrongly assumed that after learning Chase offers no personal loans and PNC only offers up to 35k that most big banks would not offer them. Looks like they are easier to find then I thought. Time to look for deals

Kyle Surprenant · Answer

Yeah the ARV will be about 95k. I hadn't thought about getting a commercial loan. This will only be my second property. The first I have only had for a year and had gained about 30K in equity. However that equity is mostly due to a large uptick in the market which I bought it in.

Keith Gilbert · Answer

Have you done an analysis on the ARV? Do you have a plan for rehab with a budget?By "the next SFH" it sounds like you've done it before? You might be able to seek out hard money to purchase and renovate and then refinance.Otherwise - do you have equity in your current place? What about a commercial loan rather than a conventional?

Chris Mason · Answer

Credit card companies have no idea how much money you make, they approve/decline in no small part based on the size of your historical lines of credit that you've got perfect payment histories on.

Call all your credit cards, ask for an increase for house improvement purposes. In 6 months, do it again -- now the size comparison will show a history of larger credit limits being paid on time because of what you did six months ago. And so on.