I've been trying to raise $45k for a couple of months to finalize a deal, but haven't been able to find the right partner.
I came across a company, The Funding Group (TFG) which goes to all their lenders and raises money on your behalf. In exchange for that they charge a 12% fee. Also, each lender they go to needs to run a credit report. As a result you can have multiple hits on your credit with no guarantee of getting the funding.
I'm looking for some advice here. How should I approach this? I'd very much prefer to find my own lending source, but it hasn't worked out (mostly because the loan would be a second lien position due to the seller financing). Is something like this a terrible idea?
Thanks for your help!
wow. A 12% fee just to find a lender. Not including the lender's charges and the interest.
There's got to be a better way for you to raise that money? Have you network in your local REI looking for lenders or HML ?
@Robert Lindsley I second @Chris T. 's sentiment that 12% just to find a lender seems like a very high fee! If the deal you are trying to fund is a great deal, you should be able to find a partner willing to take the second lien position in return for some kind of payment (which could be structured numerous different ways).
Thanks @Chris T. and @Anthony Susco . I agree. I need to get funding lined up asap but I'm going to continue looking. Hopefully I won't need to go down this route at 12% - I certainly don't feel like with those terms there's any interest in them becoming a long-term financial partner.
FWIW The deal is terrific. Cap Rate of 11.18% with a cash on cash ROI of 22.06%!
Thanks for your thoughts on this! I definitely need to keep looking.
Did you ever get financing for this project?
I haven't yet -- I was traveling last week so wasn't able to make much progress on it.
Hopefully the PA for the property will be signed next week. From there I have 15 days to finalize the funds.
I'll give you a call next week. Hopefully there's a way we can work together!
Free eBook from BiggerPockets!
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.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.