I have $30k to invest in rental property or property to buy and flip but I can't get a conventional loan. What can I do?

Asked by Kmadcreative, Atlanta, GA Wed Dec 19, 2012

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Sonja Tani, Agent, SNELLVILLE, GA
Thu Jan 10, 2013
Hi ,
I see you have gotten a variety of answers to your question. All of them are of value but, if you're new at this, I imagine you're a bit confused. If you haven't already made arrangements or haven't given up on the idea, let me try to simplfy it for you.
Based only on the information in your question, this is what I would suggest.
1. The first thing you need is a Buyer's Agent. You need to find an agent that is well acquainted with the area you are interested in. Atlanta is a big place and areas differ greatly in their desirability. Some areas are good rental areas and others are better for flipping. The amount of your offer will depend on what you plan to do with the property and the likelihood that it will rent or sell quickly. The longer you have to hold a property, the less you will profit from it. An Agent who is familiar with one area may not be as well versed in others. Any Agent that claims to know "Atlanta" completely is suspect, in my opinion.
2. Second, you will need financing. Since you cannot qualify for Conventional Money, you seem to have little choice but to use Hard Money. You say you have $30K to invest. In this market that will not buy you anything that doesn't need considerable re-hab. That being said, you do not want to invest all your funds in the purchasing of the property. You need to leverage that $30K. My advice would be to use $15K as your down payment and reserve the other $15K for re-hab. Since most Hard Money Lenders require 30% down, that opens up your choices in the $45K to $50K range. There are many more homes for sale in that price range but they will require re-hab. Most Hard Money Lenders will only lend for 12 to 18 months but there are some that will lend up to 3 years. Give yourself plenty of time to get the property re-habbed and sold or rented out. Another thing to be sure of is that there is NO pre-payment penalty in any agreement you sign. You want to be able to pay the loan off as soon as possible.
3. If you have not done this before, once you have acquired the property, there are areas of the home to put your re-hab money into that will bring the highest return on your investment. Things like paint colors, flooring, countertops and fixtures can make all the difference in the world in how quickly you will be able to move the property or rent it.
4. Lastly you will want to get the property listed to sell or rent as quickly as possible. Your Buyer's Agent can also perform this service for you.

May I suggest a Buyer's Agent that I work with regularly who has over 40 years experience in and around the Atlanta area. He is an Agent that will tell you outright if the areas you are considering will work for what you decide to do with the property. He will also tell you his expertise in certain areas and possibly suggest another Agent who may be better versed in the area you are considering. His name is

Joel Shaffner and his contact number is 770-361-1086.
You can call him and at worse get good advice from him.

As for financing, I would recommend a company that I have worked with in getting some of my non-conforming clients finance. They work both with Residential Loans and Hard Money loans. They will lend up to 3 years and never include a pre-payment penalty clause in their agreements. Their contact information is:

The Westmoore Group, LLC
Ph: (646) 801-6190
Fx: (646) 619-4291
The Westmoore Group, LLC is a licensed lender in the State of Georgia and operates under the license #30544.

When you acquire a property and need some help with the re-hab, I offer my services. Please contact me if there is any way I can help.

Good luck!
0 votes
, ,
Wed Jan 9, 2013
C'mon Bruce...no one really steals A/C units in Atlanta. That's the city's self help maintenance division. You'll get it back when it's fixed..at least that's what I was told.

I'd recommend getting a bridge loan if you are going to flip properties. Ready? This is how it works:

Investor 1: Investor buys the property for you. You lease it back and find a buyer to flip it to. There is no mortgage payment during the time that the investor holds the loan. However, the investor is going to charge you 3% of the balance until paid off. Worse, it's compounded (that's 36% per year). Talk about high costs? Welcome to the world of private money! There is no down payment required if you can get the purchase price at or below 70% of the after repair value. YES, you can finance repairs. Credit is verified but not used to turn you down. It may alter the fees due at closing (up to 5% plus title fees). There is an application fee up front and an appraisal (you pick) or CMA/BPO may have to be used. Can be used for primary residence or investment.

Investor 2: You buy the property. Investor lends you the money. Must be investment property. Minimum down payment is 35%. Figure on a $50,000 sales price, that's $17,500 (half your money). If you don't want to pay that much down, the lender will allow the seller to finance the down payment or a portion of. If you don't want to pay the 15% interest only payment on a larger loan amount, you may collateral the loan with a free and clear property. There is no pre payment penalty. There is an application fee. You pick the appraiser. Credit is checked but not used to turn down. May affect the rate (like it can get any worse right?). Fees due at closing around 5% plus title fees.

Investor 3: Minimum loan amount $60,000 to $90,000 offers a rate of 15% with up to 7 points plus title fees. No money down if property is obtained up to 80% LTV for primary residence or 70% for investment. If you can get the property at 65% or less, you may be able to finance the costs. Otherwise, if the sales price is higher than the max loan amount, then you have to pay the difference. Ex: Sales price is 70,000. Value is 100k. No money down. Ex: Sales price is 85,000. Value is 100k. You pay $15,000 down. No pre payment penalty. There is an application fee up front and appraisal is required.
If the loan amount exceeds $90,000 on 1 property or combination of several properties equals $90,000 then start rate is 9.5% and is adjusted based on credit scores.

The products okay to use for Foreign Nationals.

Bruce is right. You need to keep the money in your pocket for expenses. If you blow it all on purchasing a property, you won't have any money to buy the new A/C system that is being fixed.

Tip: When talking to hard money lenders, make sure to ask which zip codes they won't service. I found a bunch (I have 300 lenders) that won't lend in 30310 through 30318 zip codes because of the theft of the copper and metals from the homes.
0 votes
Darrell Hess, Agent, Asheville, NC
Thu Dec 20, 2012
You could invest with a trust or investment group that focuses on real estate.

You could also go the hard money route.

Rodney Mason - Wouldn't he run into the Georgia High Cost Rule?

I am assuming he wants to buy something under 50k. I'm only basing this on him having 30k to use for purchase and repairs since he said 30k to invest. Are we wrong to assume this Kmadcreative?
0 votes
Joel Madden, Agent, ATLANTA, GA
Thu Dec 20, 2012
I've an investor who recently used http://www.limaonecapital.com to provide financing on a flip. May be worth checking out.
0 votes
Lee Taylor, Agent, Decatur, GA
Thu Dec 20, 2012
Walk in to your local BB&T branch, or maybe your own personal bank - get an appointment with the branch manager who can discuss their HELOCs.

Stacy Clein at the Decatur branch is very cool. She's helping a client of mine with one of these right now.

Now, I know that they favor primary residents, but see what they have.

Otherwise, Peachstone Capital or another hard money lender will get'er dun...see web reference.
0 votes
David Mays, , Atlanta, GA
Thu Dec 20, 2012
You may need to look mid to long term with this venture for yourself. It may make more sense to look for a decent home you can rehab and turn into a rental. Now you will need to find the market or niche area that you feel comfortable with investing in. But flipping in this market may not make the best sense right now.

David Mays Jr
Keller Williams Realty Cityside
404-384-384-3894 cell
770-874-6200 office
0 votes
, ,
Thu Dec 20, 2012
My question would be, why can you not get a conventional mortgage? If it is due to credit issues, then you are probably better off using the $30K to get your credit back on track.

As others have indicated, you have to be VERY careful when investing in real estate. There are many other expenses that are often not considered.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes
Bruce Ailion, Agent, Marietta, GA
Thu Dec 20, 2012
It is very difficult to buy and flip properties profitably. As a small investor you hear of people making fortunes with little or no money, as often as you here of people winning in Las Vegas. People boost about their wins, seldom mention their losses.

If all you have is $30,000 flipping is not an appropriate investment strategy. It is a gambling strategy as likely to succeed in real estate as Las Vegas. You would need to go into a market where "as is" homes are $10000-15000. By definition those are ultra-high risk, dangerous locations. You can buy for $15K, you will install an $800 alarm system, pay $22 per month to monitor, have a worker stay in the home. While under contract awaiting your small profit, someone breaks in, steals the HVAC, appliances, breaks the windows and pulls the plumbing and wiring out of the wall, $10-15K loss for the possibility of a 3-5k net pretax gain. If you can afford the loss of time, energy, and a 30-50% loss of your investment, continue, flipping is for you. If not, use the 30K as a down payment is a safe, stable, market and collect rental income and make 8-10% a year.

The experienced property flipper knows the costs, knows the risks, knows the real rate of return on transactions, has the funds to lose, and accepts those very high risks. This does not sound like you.

Bruce Ailion,
RE/MAX Greater Atlanta
An Atlanta Real Estate Expert Serving Clients Since 1979
RE/MAX Hall of Fame – REALTOR Phoenix Award
Certified Residential Specialist
Certified Real Estate Broker
Accredited Buyers Agent
MS Real Estate and Urban Affairs
Certified Distressed Property Expert
Certified Investor Agent Specialist
Certified Internet Professional
203K Certified Specialist
2050 Roswell Road
Marietta GA 30062
404-978-2281 Direct
404-386-3682 Assistant Robin
678-760-6266 Buyer’s Agent Adam
770-973-9700 Office
0 votes
Jim Olive, Agent, Key West, FL
Thu Dec 20, 2012
Buy a property in Orlando, or one of the many markets nationwide, where you can pay for the whole thing in cash with your $30k. Leveraging with a loan would be better, but if you can't get the loan, you can still make the purchase. A bit harder to manage from afar, but quite possible worth the extra hassle/expense. Best of luck with your investment...
0 votes
Silas Frazier…, Agent, Tucker, GA
Thu Dec 20, 2012
Try Citizens Trust Bank. They do loans starting at $25,000. 1.888.214.3099 http://www.ctbconnect.com
0 votes
FredeRick La…, Agent, Dunwoody, GA
Wed Dec 19, 2012
I'd suggest finding a property that already has rental income and purchase it quietly, don't disturb the current tenants during the purchase and sale process. I have three properties that will fit that discription in the process of being listed. If you are interested in meeting, I would be happy to lay out some potential properties. Please email me at RuckerRealtyTeam@gmail.com to discuss further. Mr. Rucker.
0 votes
William L. B…, Agent, Atlanta, GA
Wed Dec 19, 2012
Hi Kmadcreative

I can appreciate your frustration, as many people today want to invest in the Atlanta rental market. I'd say you have a couple of options:

1. you could look for homes which are priced in the $30k price range so that you could simply pay cash....you might be surprised what $30k would buy you in the ATL market...check the Hud site, The Homepath site, and the Homesteps site, for forecloses.

2. You could entertain the idea of buying property with a business partner, which would potentially enable you to buy into a better neighborhood or better rental area.

Hope this helps! Feel free to contact me if you have other questions!

William Bedgood
mid-century/modern enthusiast
Keller Williams Realty Intown Atlanta
621 North Ave. c-50 (behind Ponce City Market)
search here for your dream home:

...the greatest compliment you can offer me is the referral of your family and friends
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