A few months ago, I bundled up my investment properties and sold them to another real estate investor. When I originally purchased the homes, I had planned on keeping the houses for the next few decades. Alas, taxes rose at a rate that rents could not absorb, so I decided to cut my losses and run for greener passages by selling off rental properties.
Selling the rental properties was pretty easy! I listed them on Craig’s List and fielded phone calls and had a buyer secured within two weeks. Buying the houses, however was much harder work Not only could I not find financing, but I had to get creative when I did finance my purchases. At issue was the cost price of the homes. With purchase prices of $19,500 and $32,000, I was way below the mortgage threshold for traditional lenders. Using my own experience as a template, I’ve devised a method for “backing” into a mortgage when no large bank wants to give you one for low value real estate or rental property purchases.
Since I spend half of my life on Periscope I hopped onto the live broadcasting platform to share how you too can finance a real estate purchase. Check out the video below for more information.
Here are the options mentioned in the video:
- Borrow from your 401(k). It’s not a method that I recommend because of all of the pitfalls of doing so. Everything from origination fees to opportunity costs, repaying with post-tax dollars to potential penalties encourage to me dissuade others from utilizing this method.
- Take a withdrawal from your 401(k) – but you can’t really do that with investment properties.
- Use peer-to-peer lending communities such as Prosper.com or LendingClub.com to finance your deal.
- Try a personal loan from a traditional lender or bank.
- Create an investment partnership or creation from silent partners
- Hard money lenders which I don’t recommend.
- Pay cash and then do a cash out refinance or a home equity line of credit.
Interested in learning more? Join me, all through the month of May on Periscope as I talk about the process for buying investment properties for under $30,000. I’ll be broadcasting live on Tuesday and Thursdays at about 9:00pm Eastern. See you there.
