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Updated over 4 years ago, 05/12/2020
Mortgage originators for lower cost properties
Happy Mother's Day weekend BiggerPockets family! My partner and I are looking to get our plans underway on buy and hold rental properties and I think a concern is going to be on lenders who have a minimum loan amount. We both spoke with a national lender who is advertised to be very investor friendly and in fact run by a REI investor themselves. When we received the pre-qual package we were disappointed to read a minimum loan of $75,000.
My partner and I are open to investing in different markets of the country but our goal is to stay home in our neck of the woods of Connecticut. I know some of you may have just wrinkled your nose and said what in the world can you get for under $100k in CT anyway, but it might surprise some to hear that there are some pretty good markets in CT to do that, and do that in pretty much move in condition.
So our goal was to find single family homes putting down 15% so with the $75k parameter means a property at least $100k. This significantly makes it difficult to make the numbers work.
Wondering if anyone knows of either local CT lenders or a national lender who operates in CT who might help
In lending for lower loan amounts. With lower loan amounts we are talking properties priced in the $70k-$95k range. So we are really on the cusp of making our numbers work.
Any suggestions would be appreciated. Thank you all in advance!!!
@Diana T.
Ok mistake on the numbers.....meant to say 15% down on about $90k home not $100k but still making our numbers tight to work in our favor. Thanks!
85% LTV is not something you're going to find. Lending is super tight right now, as specially if you don't already have a relationship with a lender.
I'd talk to local banks and credit unions in your market, who know the market your investing in and may look past the $75K threshold barrier you mentioned. If you are able to find one willing to lend, I'm guessing it will be at 65% LTV with a 1.3/1.4 DSCR and a 6 month seasoning.
You may have better luck raising private money.
@Jeff Piscioniere
Maybe consider a Personal Loan through Citizens or Sofi and refinance later.
I was able to get $50k through Citizens effortlessly, literally takes 5 minutes. They just lowered it to $15k during COVID but I bet it goes back up to $50k when the economy is reopened.
Looks like Sofi is still doing $100k
@Paul Shannon
We just spoke with the lender yesterday who was giving us 85% LTV. Still out there.
@Stephen Cornell
Thought about this, good point. Thank you!
You can try to buy two at the same time and get a blanket mortgage to meet the requirement . This will be more of a business loan. I know a guy who bought 4 studio condos in my building in Hartford, CT through a community bank and got a blanket mortgage.
I still have a couple of studios there. If you interested I can send you more info. Just send me a message.
@Roman M. Interesting idea. So are you saying an seller with a portfolio? I can’t imagine it would be easy to coordinate separate sellers right?
It was the same seller with 4 units.
@Corey Kessler we’ll keep you in mind. Thank you!
@Stephen Cornell what kind of interest are you paying on that? Is it a LOC or funded all up front? Thanks for the insight.
@Aaron Baribeau all funded up front, 7.69%
@Jeff Piscioniere look into Movement Mortgage. They have multiple locations and my loan officer says they will loan for as low as $30k but please verify.
@Jeff Piscioniere your absolute best bet would be a small local community bank or a local credit union. Not only will they be more flexible you will find much better rates. However, each one will have different guidelines. Go into every branch or at least call and don’t get discouraged. I visited no less than 15 banks and credit unions before I found a great partner that does all of my deals now.
That being said, all of my buys now are cash and once fixed and rented we do portfolio loans and refinance our cash back out. Our lender def likes me doing 500k portfolio loans rather than 50k normal loans. But they did it for me in the beginning.
If low balance loans is what you are looking for just start Monday by picking up the phone and calling everyone. I guarantee you will find a good fit.
@Jeff Piscioniere
The Graham Parham team at Highlands Residential may or may not be able to do 15% down, but they've done several loans and quotes for me at less than 100k. Closed on two within the 50-60k principal owed range.
Additionally, it may be worth asking if they are negotiable instead of just throwing in the towel. I know I've seen some brokers have that posted but are willing to move based on credit etc.
@Corey Kessler what’s the ltv now?
@Peter Baudendistel where is Highlands Residential located? Any idea if they operate in CT?
@Jeff Piscioniere
Texas but they do stuff all over the country. Used them in AR and TN myself.
@Diana T. I also found a credit union that had 15% down, but it is only for Single family homes. The issue for this particular bank was that closing costs with 15% down were significantly more than the typical 20% down, so if you haven't already, definitely inquire about that. In this deal, cash to close between 15% at this credit union and 20% down at other insititutions was almost identical so obviously you'd rather have the equity than it go into thin air at close.
For multi-families, I could not find a bank (& I tried a bunch) for 15% down. I think it would have to be a specialty loan because I believe that any Fannie / Sallie Mae backed loan require at least 20-25% down for multis.