Looking for the right path to get financing in Ohio

11 Replies

Hello everyone! I am trying to find financing for my first flip and am unable to get answers to my questions around financing. Here is what I'm struggling with:

- The financing company (hard money lender) states that they don't do business with individuals, is this a normal practice? What would be the best car scenario for flipping deals - borrow individually, or as a business?

- Does anyone have any good RE lawyer contacts in Ohio that proven to do good business with?

Thank you in advance!

Tetyana

Hard Money Lenders prefer to have entities as borrowers, but don't always require it. An LLC clearly shows business purpose and shows that it is not a consumer loan. Some of our funding sources require an entity, some do not. In Ohio it is relatively inexpensive to setup an LLC for your flip business. Either set up an LLC, or work with a lender that does not require it.

We have a couple attorneys we work with. PM me with what you need, and I can connect you to the right one for you.

@Tetyana Hubska I would recommend conventional lending for flips. 15% down on a single family with a low interest rate. The right lender can flip these deals pretty fast for you. That is how I finance my flips. PM me if you would like more info regarding conventional lending.

@Ham Merritt thank you! Sounds interesting. I will PM you. 

Aren't conventional lenders more strict though? I thought they would require much more paperwork, and the turnaround time would be much longer. I would like to hear your perspective and lender's requirements. 

Tetyana 

@Tetyana Hubska yes you are correct, mostly. Conventional lending is typically also the cheapest. If you connect with the right conventional lender you will have less overlays and delays. If your going to go the route of conventional lending, I would suggest connecting with a mortgage banker over a bank, credit union, or broker. Mortgage bankers carry less overlays and get the transactions done faster, typically. Mortgage bankers also will most likely have access to sub-prime products as well as portfolio wholesale product of which would make it even easier to obtain financing. I find this to be an avenue of value to most investors if they know where to find it. 

@Ham Merritt so how does conventional financing feel about fix and flips? Is it even possible to get financing for distressed houses? I thought that's the reason everyone is going the route of private and hard money lenders. 

@Tetyana Hubska it depends on the conventional lender and the product. Yes it is possible however, there is a line to be drawn with conventional lender with regard to that. Many conventional lenders will not finance on anything worse than a C4 condition. The property would need to be livable at a minimum. There is defiantly more red tape with conventional lending however, it can be done. I use conventional lending for my fix and flips however, I buy livable properties.

Hey Tetyana,

Most hard money lenders require an entity because these are supposed to be "business purpose" loans and it's easier to justify it being a business purpose loan if it's done from one business entity to another.  Business purpose loans are not covered under Dodd/Frank and aren't subject to the same regulations.

Stephanie

@Tetyana Hubska

@Tetyana Hubska

I forgot to mention, we use Joyce Lombardo at Fast Track Title for all of our Ohio closings.  She is fantastic.  PM me for her contact information.

Thanks

Stephanie

Originally posted by @Ham Merritt :

@Tetyana Hubska it depends on the conventional lender and the product. Yes it is possible however, there is a line to be drawn with conventional lender with regard to that. Many conventional lenders will not finance on anything worse than a C4 condition. The property would need to be livable at a minimum. There is defiantly more red tape with conventional lending however, it can be done. I use conventional lending for my fix and flips however, I buy livable properties.

 Thank you for your responses. 

Originally posted by @Stephanie Potter :

Hey Tetyana,

Most hard money lenders require an entity because these are supposed to be "business purpose" loans and it's easier to justify it being a business purpose loan if it's done from one business entity to another.  Business purpose loans are not covered under Dodd/Frank and aren't subject to the same regulations.

Stephanie

@Tetyana Hubska

Thanks a lot Stephanie. I did some research as well and recognized that I have more chance getting financing and liability protection with an LLC. I've submitted the paperwork.

Tetyana. 

@Tetyana Hubska

LLC's are only one part. For total protection, keep your assets separate and get an umbrella liability policy.

Best of luck

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