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!
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