Refinancing properties under 100k

[Maricruz Romero]

Hi BP!

I am looking into a deal for which the ARV is less than $100k, I am estimating $55k to $65k based on MLS comps. I am looking to implement the BRRR strategy so buy it cash and refinance once its rehabbed and rented. Has anyone refinanced a property that appraised under 100k? How difficult was it to get a loan of this amount and what lenders should I approach to confirm they would lend on this property?

Thanks!

[Erik W.]

@Maricruz Romero, hi and welcome!

Yes, I do this frequently.  The kind of lender you want is a local bank who can appraise the deal almost via a drive by.  Get to know a branch VP or some one like that who has a "floor limit" on what they can approve without going to a committee or board to get approval.  I've got several places that we're refinanced recently in the $30K - $50K range, and these kind are easy to do.  Appraisal: $300-$400, loan fee $150, fees $100ish.  All done for around $500-$600.  They portfolio the loan in house and make their interest off the interest rate spread.  It helps if they know you have several places like this or intend to do volume with them.

They key with smaller properties is to keep your costs low!  Under 2% is ideal.