Funding Ability for Auction Purchase?

Question

Hi. I'm new to the forum and hoping that I can get some advice. I found a house up for auction that I can purchase and rent out if I win. I plan on keeping the house in my portfolio and not flipping. The house needs only a paint job and ready for move-in. I currently have only one other rental house in my portfolio that was purchased the traditional way through a bank. Here's my question: Would it be possible for a hard money lender to approve me the full purchase amount of the house to buy at auction? The purchase may be around $110,000, but the value of the home is estimated at $140,000. I don't have any funds to contribute the the down payment of this new opportunity. I don't have any access to private lenders nor do I want to partner with anyone, so I'm solely depending on a hard lender. Do you think this would be possible? Any advice or suggestions would be appreciated.

Kelli Nelson · Answer

Account Closed I am definitely open to all and any suggestions and advice. How do we connect?

Kelli Nelson · Answer

Hello @Michelle Wax. I am definitely interested in any help and would love to hear from you. How can I get in touch with you?

Michele Wax · Answer

Interested in helping you find financing.

Kelli Nelson · Answer

Thanks for the feedback Benjamin Hurwitz. That's a bit disappointing to hear, but I needed to hear it. It's just that I see some hard money lenders advertising that they offer 100% for rental loans, so I was hoping there was some possibility.

Mark Safrin · Answer

Do you have any equity from your first property that can be pulled to help towards this second purchase?

Most hard money lenders will want you to have some skin in the game. We for instance will lend up to 90% of purchase (capped at max 75% of LTV if you have experience and reasonable credit).

This means you would indeed need that 10% from somewhere. A very motivated seller might help finance the deal. A generous uncle would be even better. Equity from your first property?

Second position lenders will likely not look at something so small by a large margin (Smallest lender 2nd position I've come across is $400K just for that position, usually they are over a million).

To summarise: Probably no. Sorry.