Hello BP family,
So I was on here a couple weeks ago describing my current situation with trying to build my current portfolio. Shorter story short:
-own property (used FHA loan, purchased 7 years ago, still not at % to refinance to pull equity)
-Serving in military still have VA benefits to use for another purchase( living in the DC market area now)
-Have savings but not enough to put down for most conventional type loans
So i say all that to say this, i started venturing into the realm of start up loans for small businesses. My research on this particular topic is very minimal so bare with me. After looking a bit for ways to finance my next deal this became an option. Here's my thought and welcome any education on the thought on whether there is a better way or if this way is complete crap! ( I prefer brutally honest, so don't hold back)
My thoughts are to use the credit and or means that I currently have to try and buy a house at a good value (70-85% of value) under my name.
-Start a small business(LLC), transfer the property into the business.
-Request a small business loan to do fixes whether large or small.
-Either flip home pay off the start u loan and save remainder, do this until i saved enough capitol to where i don't need the start up any longer.
-Or rent the property out at a decent return and pay off the loan slowly and generate passive income but also helps me get into another piece of property.
Ultimately Im looking to get into this business but I want to find what is considered the best way to maximize my efforts right now being in the position I am currently in.
Any suggestion comments thoughts will be greatly appreciated!
@Darren Landerway I have heard the small business loans are very painful to get and not that great. Do your research because this is just from a friend I know that applied recently and not from my own experience. Trying to move that property into a business and then use business loans to work on it does not sound like a very good idea to me. There are issues with transferring the loan (due on sale) or reselling the property to your business (possible arm's length issues??). I am a fan of the KISS method and it seems like you are over-complicating it.
If you have the VA loan, why not use that to get in with $0 down? You can also look at refinancing your current residence to a conventional mortgage, which will free up your FHA and you can possibly get an FHA 203K loan to get a run-down place and include the fix up costs. It isn't $0 down like the VA, but it can roll in repairs.
It's not going to happen. You're not "starting up a business", you're rehabbing a house, in the eyes of any lender. And "start up" loans will usually be private partners, not banks.
@Bryan O. thank you! I done a little research and have found that it is a difficult process to succeed in, so thank you for confirming. As for the equity in my current place I haven't quite reached the threshold to allow for me to beneficially refinance. Meaning my current property is at about 80% of the loan paid down but since I've converted this into a rental property most banks are only willing to refinance loans that are 75% or less. As for the VA loan I still haven't ruled it out but I would like hat to be a last resort if I can. I'll look into the FHA203 possibilities.
Thank you very much for the reply. I feel like I'm struggling trying to find the best move to push forward!
@Wayne Brooks thank you wayne, direct is key!
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