Newbie to RE Investing

Newbie to RE Investing

Elmont, NY · Member since 2018 · 4 posts · 0 votes
Hi All, I’m new to the real estate investing world and have been educating myself a lot on the logistics of how this all works. I have one question regarding getting funding: Starting out, I plan to do fix and flips of SFH in my area (Elmont, NY). I plan to use hard money to fund a portion of the purchase. What I’m finding a hard time understanding is that whenever I find a good deal, do I need to have proof of funding lined up before I make an offer? Or do I find the potential deal, run the comps and prepare what I plan to offer, then approach the HML with the proposal, get a letter of intent from the HML (if they like the deal), and then put in my offer to the seller? Does it work like getting a pre-approval through a conventional lender before putting in an offer for a property? Or do I just disclose to the selling agent that I’m an investor and here’s my offer - if it’s accepted, I need X number of days to get secure the funding? Any help would be great! Thanks.
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  • Investor · Ocala, FL · Member since 2018 · 144 posts · 101 votes
    7y

    You should start the conversation with the lender as soon as possible. HMLs tend to be more relationship driven than traditional lenders for the most part. They'll want to see your financial situation, but also look at you as a professional. 

    Just starting out, you will be considered higher risk, so they may want you to jump through a few extra hoops. You'll also have higher fees the first few times, so you'll need to buy something with better margins. After you have a HML willing to work with you, they can give you guidelines for actually writing an offer. It is a little bit like having the pre-approval on a traditional deal.

    I definitely wouldn't recommend writing an offer before you have your financing sorted out.

    Good luck!

  • Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
    7y

    @Account Closed

    Welcome to Bigger Pockets.

  • Elmont, NY · Member since 2018 · 4 posts · 0 votes
    7y

    Thanks so much JD for the info - that helps a lot!

  • Elmont, NY · Member since 2018 · 4 posts · 0 votes
    7y

    @ George Blower - thanks for the welcome!

  • Lender · Los Angeles, CA · Member since 2018 · 95 posts · 16 votes
    7y

    As a noob it's all about building your team and creating relationships.  You always want to have some lenders on your team.  Private Money can definitely help you establish your portfolio and the right lender can help you expand it.

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