Private Money Buy & Hold Strategies

[Matthew Marshall]

Hello BP'ers!

I wanted to have a quick brainstorming session and get all of our creative juices flowing. My question is this, if you wanted to use private money as a source for a buy and hold investment, how would you structure the deal? How could you being as creative as possible, leverage into a buy and hold (cash flowing) property using none of your own money?

Here is my first thought, remember I am fairly new at this and am not 100% if this would work or even if this deal would be possible to find.

I was thinking, find a seller that would be willing to do seller financing and line up a private investor for a 20 - 35% down payment. Negotiate a 5 year balloon with interest only payments (for the seller financing). Negotiate a 7 - 8% annualized interest only payment (paid quarterly) for the private money investor. After the first year, take out a conventional loan to pay back the private money investor to increase cash flow. Then work to roll the seller financing into a conventional loan as soon as possible. Assuming the property cash flowed and there was appreciation that took place, you could possibly make this happen. Of course the property would need to be a relatively higher cap rate considering it would need to cover the 6 & 8% interest being paid.

Another option would be a lease option or something of that nature, sublet and exercise the option with private money or a conventional loan.

I would love to hear some other ideas/thoughts, etc. on this!

[Brian Gibbons]

Think of REI as a 4 legged stool.

Leg 1 - Buyers - for Investors, FHA Buyers, Tenant Buyers, Owner Financing Buyers

Leg 2 - Sellers - A B C D Areas, Needs Work, Pretty Houses, Equity, No Equity

Leg 3 - Funding - Bank Loans, Private Lenders, JV Split Partners, Hard Money Lenders, Owner Financing for Free and Clear Houses.

Leg 4 - COIs - Center of Influence Referral Partners - Only after you have success stories, like CPAs, Attorneys, Financial Planners, etc to refer you business.

Techniques include: Wholesaling, Rehabbing, Lease Option Flips, Sub2 Rent Out, Sub 2 Lease Option, etc.

Private Lenders for Buy and Hold was your question.

I would focus on sub2 and rent out. No Private Lending.

Or Owner Financing for Free and Clear Houses (payments only at full price)

But that is me.