Profile picture for user9054615

Where can I get a small loan?

I am looking at buying one or more rental properties around $50k.  My wife and I are savers and oozing cash and want to try rentals as an investment but don't want to pay alot because if it goes to zero, we don't want to loose sleep.  We have the cash to buy them outright but would rather use OPM, both our credit scores are excellent and no debt other than our primary residence.

Thank you.
  • April 07 2014 - Tampa
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Answers (3)

Profile picture for John Steeby
There are many different ways to look at this.  I know a guy who used his own money and paid 100%...but when the real estate market went belly up he lost HIS investments, not the partnership investment with a bank. Understand?

Do your research. Run the numbers. Create a spreadsheet. There are too many variables to give any armchair advice on this. Consult with an agent in your area who specializes in the market you want to tap.

Good luck and great investing!
  • April 08 2014
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Pay cash - you don't get to use OPM but you don't have to pay interest.  There is a reason why so many of wealthy buyers don't pay interest.  You have fees by having a mortgage and in the end it is better to collect 100% of the rent.  In addition the fees on a $50K loan are so high that you could lose months of rent just to pay for items you don't necessarily need. Look into using a LLC & work with an accountant / attorney to set up your rentals to minimize risk and maximize deductions.  
  • April 07 2014
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Profile picture for Dan Tabit
The smartest thing if you really want to finance would be to finance each home through individual mortgages tied to each home.  By doing this, if one goes to zero, the others aren't at risk.  Regional banks or credit unions may be a source. 
Since you have cash, and you are new to investing, I would encourage you to be picky, buy 1, pay cash, learn what your doing and decide if this is really for you.  It's not as easy as the late night infomercials make it out.  If this goes to zero, you weren't picky enough and only your cash is gone. Your credit is still in tact.  Just make sure you do your research, use a great agent who has experience with investment properties to assist and advise you. 
  • April 07 2014
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