Funding "101". Curious how to begin?

Question

Hello, I am new to the Bigger Pockets website. I am curious to know what steps should I take as far as the funding goes for an investment property? My situation is as such, I have done my analysis on the area that I would like to purchase in. You know the basics, what homes have been sold for in the past 12-24 months, the area, what rent goes for etc. The homes that I am looking to purchase are in the area of 40K-55K for a multifamily. I have cash to buy a home straight out but "Cash Is king" so I have read. My credit score is about 580 due to me short selling the home I purchased in 2007. Missed payments, long drawn out process etc. it is the only bad thing on my credit report. I make about 90k a year. I have been employed by my employer for more than 7yrs. Any property that I get will need work. those are the properties i have been scoping out. So I will need additional cash. I know I wont be able to qualify for an FHA or a conventional loan. I have no one to borrow monies from so it knocks out the suggestion for a private lender. So it only leaves me with the option of a Hard money lender, correct? I could always borrow from my pension or my 401k but that kinda defeats the purpose of not wanting to spend my own money. I want to do the "BRRR" strategy. so how do I find a Hard Money lender? When should I look for the hard Money lender? I am just curious to know how do I approach someone for Monies if I don't have a deal already in place? On the other hand if I have a deal in place I would need to move fast to find the funding for the deal. Just curious to know how I should approach this, my Bigger Pockets family?

Saxon Harris · Answer

Mmmmm I see! Cool. Thanks for that insight. And will do. Thank you!

Kenneth Garrett · Answer

@Saxon Harris

Saxon I would start networking with other investors.  Go to REIA meetings and build relationships.  This is where private money can be found.  It is a very discrete system.  No website to go to.  Its people skills.  Even hard money lenders want a track record, credit score, etc.  You may need to partner with an experienced investor to build your own credentials on your first or second deal.  After the first couple you should be good to go.

Good Luck.

Saxon Harris · Answer

my apologies.  Misread you reply. Scratch my last comment. Thank you.

Saxon Harris · Answer

Thank you. I have been listening. Also I heard an episode or two that a guest saying that same thing. "Open up the phone book". I was more ore less referring to "Hard Money" lending in the likelihood tbat the smaller bank funding fails.

Timothy Doenges · Answer

Saxon,

I know one of the recommendations I got was to open the phone book and call every bank there, asking if they do "in-house loans" or "portfolio loans" to people with low-mid credit. Some will, depending on the project and the presentation.

If you haven't listened to the Bigger Pockets podcast, I'd take a look at that. There are a lot of great episodes on funding, of which Episode 55 with Jimmy Moncrief is one of my favorites:

https://www.biggerpockets.com/renewsblog/2014/01/3...

Good luck, and thanks for posting!

Tim Doenges