Securing Financing - Next Steps

4 Replies

I'm going through the underwriting process right now to see how much of a HELOC I can get to leverage the down payment on my first Buy & Hold Property.

This process I was told can take 3-4 weeks (appraisal, credit check, etc.).

I think I am eligible for a HELOC amount somewhere between $10k - $25k.

I'm looking in the Indianapolis market.

What can I do in the meantime to prepare myself to take action on a deal?

I listen to BP podcasts, plan on going to REIA meet ups, have sort of a newbie mentor, and have an investor-friendly agent referred to me by my mentor.

What additional steps can I take to find my first deal? It's hard because I don't know how much $ I will get, but I don't just want to sit on my hands waiting for the underwriting to be processed. I'm thinking about "bird dogging" it with my mentor if he'll allow me on his property.

Thanks,
Ethan

@Ethan Simcox  congratulations on taking some steps to move forward!

Do you have any credit cards you can get cash advanced on? If so, you could add these funds to your HELOC. Yes, you will pay a 3% [3 points] cash advance fee. That's still cheaper than hard money.

One way to work around the cash advance fee is to open a citionline savings account and "fund" the savings account with your credit card.  This is treated like a purchase and not fees will be charged by the credit card company.  You then just wire the funds from your citionline account to your local account.  I've done this a few times with "zero balance transfer" credit card offers.  PM for more details.

I think it goes without saying that do this at your own risk and DO NOT go to Vegas with the cash!

Once you have bought the subject property for cash you can either refi and pull the equity out or sell if you plan on wholesaling it or flipping it.

Don't forget, all the big box stores will give you at least $2k of in store credit.  You can fund your rehab with these cards as well.

I bought my first deal like this.  100% funded with plastic.

With that said, I always tell new comers to at least get one small rehab under their belt no matter what strategy they are going to do in the future. 

IMHO - I would buy a $20k-$30k REO built after 1945 and fix it up to rent ready status and then offer it as a turn key or rent ready property to a fellow BP member and list it on the MLS.

Even if you break even, the education you get is well worth the effort and you will be so far ahead of the average new investor.

I hope that helps!

- it's always good to see another Hoosier utilizing this great site!

Of course, you need to read The Ultimate Beginners Guide to REI here on BP

If you haven’t already, please read/listen to these books ASAP!

Rich Dad Poor Dad

Rich Dads Cash Flow Quadrant

Rich Dads Increase your financial IQ

The Real Book of Real Estate

The ABC’s of RE Investing

The ABC’s of PM

Rich Dad RE Tax Advantages

The E-Myth

The 4 Hour Work Week

http://flip2freedomacademy.com - free e-book

Flip2freedom episode 77[http://www.flip2freedom.com/a-3-step-formula-to-a-successful-balanced-and-insanely-profitable-2012/] - podcast - LISTEN TO THIS TODAY!

BiggerPocketsPodCast

Wholesaling101 You Tube Channel

Kent Clothier – You Tube Memphs Invest channel

Shawn,

Thank you for the good advice. I like your strategy of buying an REO.

I guess I am very wary of using credit cards for financing - I know HELOC is a giant credit, but I like the benefits of the vehicle and the fact that if worst comes to worst, I can always sell my house to repay (I know it makes me cringe just thinking about it). But I would rather take a hit on my house than have to declare bankruptcy I think. Maybe I'm wrong on that assumption , so feel free to correct me if I am.

When you say that you recommend offering a rent-ready or turn key property to an investor on BP, are you referring to selling it outright?  Or did you mean I could offer to lease/rent it out to a BP investor?

@Ethan Simcox  

@Shawn Holsapple  says, "With that said, I always tell new comers to at least get one small rehab under their belt no matter what strategy they are going to do in the future.

IMHO - I would buy a $20k-$30k REO built after 1945 and fix it up to rent ready status and then offer it as a turn key or rent ready property to a fellow BP member and list it on the MLS.

Even if you break even, the education you get is well worth the effort and you will be so far ahead of the average new investor."

I will have one of these Indianapolis rehab projects available soon, and I know @Shawn Holsapple  is going to tell me to fix it up to rent ready myself, but I'm focused on wholesaling great deals to investors such as yourself.  Actually this house is already rent ready!  So I'm instead going to sell it, maybe this could be a good project for you? 

I'll eventually do a fix up on my own, but right now I'm trying to fall in love with mastering the wholesaling business!

Medium web logoBen G., Ben Buys Indy Houses | 317.455.6768 | http://www.benbuysindyhouses.com | Podcast Guest on Show #91

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you