Any place to get large unsecured loan?

[jo552006]

I was just wondering if there were any legitimate places out there to get large unsecured loans.  There is an REO my wife and I are trying to buy (for under 200k) but due to the bank's unwillingness to accept anything but cash, I don't know if we will be able to purchase the property (we qualified for 203k loans, and hard money loans, but the bank that owns the REO has rejected our offers stated they want cash only).  Sofi and Lightstream offer large loans, but they cap at 100k.  Ideally we'd like to find a location to borrow 200k @ around 10% APR.  Eventually we would want to refinance, but even at the 10% it's only $100/month more than our current rental.  Creditworthiness, income, debt are not the issue, only that the bank that owns the REO wants cash, and we tied ours up into property we can't sell fast enough.

[Paul der Krake]

Can you each get a 100k loan at SoFi?

[jo552006]

I doubt we can.  When sold our house and moved I went into business with my family.  The flexibility has been a good thing for our life but I've not yet built the business to the same level of income as the engineering field I left paid.  My wife could maybe get a loan from Sofi AND another entity... that's about the only way that could work.

(This year I showed 15k from 2 months engineering, plus 5k from family business.  Since I left engineering, I don't see me qualifying for an unsecured 100k loan regardless of my credit)

[ysette9]

Could this just be a sign that you should let this particular opportunity pass you by? I have a hard time imagining it is such a spectacular deal that you would go down the path of a $200K unsecured personal loan. That is just my own gut telling me what I could and could feel comfortable with though.

[jo552006]

@ysette9

Honestly, as I don't believe in fate or signs, no I don't believe there's anything good about letting this opportunity slip by.  To my wife and I the house would definitely be a good buy.  I'm sure that a 200k unsecured loan is not the optimal path.  What I am boggled by is that above 7% average returns is good when we invest, but there aren't places to do 10%+ interest only loans.  Is it that investors who  have the money to invest are really looking for 20% APR on their money or more?

[Paul der Krake]

No, the reason why you cannot find a large unsecured loan is because it is unsecured. Moral hazard kicks in very fast as the sums involved go up.

[Indexer]

Do you realize what you are asking for?

You want 200k unsecured interest only loan preferably around 10% interest. Based on what you've said so far you have about 20k in reported income. If it's a revolving loan that is basically a big credit card. Why would you expect lower rates than you would find on credit cards, especially given the very large balance?

Unless it is to a business unsecured loans of this size are pretty rare and normally only approved for people with substantial means.

There is an REO my wife and I are trying to buy (for under 200k) but due to the bank's unwillingness to accept anything but cash, I don't know if we will be able to purchase the property (we qualified for 203k loans, and hard money loans, but the bank that owns the REO has rejected our offers stated they want cash only).

This is odd. Obviously they don't want 200k in physical cash. It would be either a wire transfer or a cashier's check. Why would they care where the money came from before that?

Whether it is from an unsecured loan, a secured loan, or a mortgage, why do they care?  It is for real estate right? That is what mortgages are for. You are much more likely to be approved for that dollar amount with a mortgage and the interest rate will likely be much better.

[money_bunny]

My thoughts echo a few above. The check at the closing is the same no matter the financing. A bank is not expecting you to show up with a suitcase of 20's.

The bank's goal is to unload this property.

My uneducated guy on the internet opinion is that the bank knows something you do not about this property. Something that possibly previous attempted buyers tried to get financing and were unable to. Something that if you miss it during due diligence could be disastrous. Like a septic system being faulty, and not enough room to put in a new leech field. Or intense mold in the walls that you can't see on a casual inspection.

If this is such a good deal why has not the listing agent's list of "Guys they know" jumped on it, or another agent at the office, or their contractor friend. Someone at the bank? Something smells fishy. I almost bought a problem 4-family property like this 2-3 years ago and I would still be working on it. Best 900 dollars I lost was that inspection and the 80 pages of problems they found.

Can you help us understand what makes this such a prize? That might help you get your thought process in order.

You might be able to partner with someone, have your friends and family go in with an exit plan in place. Hope this is not a disaster or holidays or social gatherings are going to be really challenging.

[Classical_Liberal]

My thoughts echo a few above. The check at the closing is the same no matter the financing. A bank is not expecting you to show up with a suitcase of 20's.

The bank's goal is to unload this property.

My uneducated guy on the internet opinion is that the bank knows something you do not about this property. Something that possibly previous attempted buyers tried to get financing and were unable to. Something that if you miss it during due diligence could be disastrous. Like a septic system being faulty, and not enough room to put in a new leech field. Or intense mold in the walls that you can't see on a casual inspection.

If this is such a good deal why has not the listing agent's list of "Guys they know" jumped on it, or another agent at the office, or their contractor friend. Someone at the bank? Something smells fishy. I almost bought a problem 4-family property like this 2-3 years ago and I would still be working on it. Best 900 dollars I lost was that inspection and the 80 pages of problems they found.

I agree this is very likely.  It may not be a disastrous issue, or maybe a legal issue with the title, but there is something that would impede secured financing.  It would be wise to find out what before proceeding.

As far as large unsecured loans go, no one is willing because you could essentially declare bankruptcy on the full amount a few months after taking it out.  With very little reported income it probably wouldn't be that hard for you to do.  Do you have any other assets to secure the loan? 

[Bateaux]

We bought our home in 1992 at an extreme bargain price.   The owners were losing it.  They were willing to take a loss on the sale of the home just to get out of the loan. We paid their overdue mortgage payments by handing them $10,000 cash. The original owner, who'd financed to them was about to take the house back.   They paid $88k in 1988 and we paid a total of $52,000 in 1992.  They were moving out of town and took the loss to retain what credit they could to buy another house when financially able.  We bailed them out with an unsecured loan and the risk paid off for us.  Our most recent appraisal was for $285,000.  Quite a return on risking $52,000.

[Interest Compound]

"Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right, and avoiding serious mistakes." ~John Bogle (Founder of Vanguard, and the world's first index fund)

This is serious mistake territory. Don't do it.

[chasesfish]

You need a professional real estate partner/angel investor.   Bigger Pockets is usually a good place to ask this type of question

[aspiringnomad]

We bought our home in 1992 at an extreme bargain price.   The owners were losing it.  They were willing to take a loss on the sale of the home just to get out of the loan. We paid their overdue mortgage payments by handing them $10,000 cash. The original owner, who'd financed to them was about to take the house back.   They paid $88k in 1988 and we paid a total of $52,000 in 1992.  They were moving out of town and took the loss to retain what credit they could to buy another house when financially able.  We bailed them out with an unsecured loan and the risk paid off for us.  Our most recent appraisal was for $285,000.  Quite a return on risking $52,000.

Sounds like it worked out well for you, especially if you've been happy in the home, but I wouldn't say it's quite a return. Your nominal CAGR was about ~7% over that time period, not including any house maintenance costs, versus ~9% (or $414k current value) if you had parked the $52k in the S&P and reinvested dividends during the same time period. The long-term nature of real estate transactions can make them seem like better investments than they actually are.

[jo552006]

Lots of responses.

So, somewhere I saw somebody mention only 20k in income. That's just myself.  My wife made a lot more than that.

As a quick side note, we'd almost be able to buy this property if we hadn't bought a large piece of property cash earlier this year.  We never thought this house would be in our price range (we've known about it since it was first foreclosed on many years ago)  With the sweat equity and the lower cost of living than my current rental, our future would take an even bigger turn towards the better.  The fact that I'd have a garage wouldn't hurt either.

I'm not ACTUALLY wanting a huge unsecured loan.  I"m trying to figure out HOW to buy this property.  What I WANT, is a large SECURED loan, however the bank does not want to "waste time" with financing because they don't believe it will qualify..... this is where the issue comes in.  People have tried to buy the property (I assume) with financing before and it fell through.  It is an REO and does not qualify for FHA loan criteria as it sits.  I can do all the work but the roof (which ISN'T leaking, but will need to be done soon).  I truly do know the downs on the property, the biggest two being that it is a foreclosure and has (relatively) normal foreclosure type issues.  Thermostats were removed by previous owner, small damage here and there, deck has broken beam, and it will need a roof but can wait until warm weaather.  Second issue is that neighbor's property you *currently* need to drive by doesn't look so good.  (That would eventually be changed)

The house *should* qualify for a 203k loan with 30k in repairs, but the bank thinks the repair cost is more than 30k.  (I guess maybe they're right if I have to sub EVERY-SINGLE-THING out)  This is why they want "no financing".  Which means cash as far as I can tell.

In my dream scenario, I'd get a 200k interest only loan at 10% for 1 year, secured by the property.  I CAN get the house ready to refinance RAPIDLY, but at 10% interest only, the payments are only slightly more than my mortgage, so it would buy me some time to do things that don't NEED to be done, but would be nice (not driving by said neighbor).  Also, 10% is better than normal investments afaik, so I would think not rapidly refinancing would be in the lender's best interest as well, especially since the security (house) would be worth increasing value as time goes on.

Now, I know this dream scenario doesn't exist.  But there are hard money lenders out there.  I've spoken with them, and the house meets their criteria.  If the bank rejects my next offer (with hard money) this week, then they DO in fact want physical, cashier's check or stacks of 20's.  (Realistically, they just want somebody who HAS the cash to buy it outright)