sick and tired of being sick and tired

Buying & Selling Real Estate
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sick and tired of being sick and tired

Nalo Coban
Real Estate Broker · Charlotte, NC · Member since 2014 · 129 posts · 12 votes

I NEED to start creating cash flow, however I keep getting stuck when it comes time to get funding...

I have all these questions:

1-should I concentrate on my first flip or should I just start with one SFH, rent it out and move on to the next?

2-Who is lending to LLCs with little or no money down?

3-If down payment is required, what is the best way to get the down payment without using my own money?

4-should I pay off some of my personal bills to get my credit score up or use my LLC credit (which doesn't have credit)

5-what should I be looking for in a bank when I open my LLC bank acct?

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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y

1. Fix and flips generate big chunks of cash. If you do a good job, meaning buy cheap, stay on budget and sell quickly for the expected cash. They can lose big wads of money if you mess up. I had a borrower default doing a fix and flip. I believe he lost about 30 grand on the deal. And fix and flipping is a job. You have to put time and effort into the job or you don't get paid at all.

Rentals generate small increments of income. But don't require much work to generate that income.

Both of these require you to have significant chunks of your own cash. So neither works very well if you have no money of your own.

2. Nobody

3. Save it up. Rentals are all about cash on cash return. Getting 10% cash on cash return is pretty good. Even if you can manage a low down payment deal, the extra interest charges from being over-leveraged eat up your income.

4. Fix your credit. In order for your LLC to borrow money the lender will look at your personal credit and require a personal guarantee.

5. I'd find one that is doing investor real estate loans. Opening a checking account is the first step to building a relationship.

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  • CK Hwang
    Capistrano Beach, CA · Member since 2013 · 283 posts · 169 votes
    12y
    Hi Nalo Hard to answer all your questions precisely but here are some of my thoughts to your questions 1. Flip, buy and hold, only you can decide for yourself 2. Trying to find a lender who will finance a LLC is difficult. If you want to keep your property in a LLC, many investors buy in their name then transfer title into a LLC 3. Personally, I find buying with no money down or using other people's money with non of your own to be a very hard thing to pull off consistently. Most lenders and investment partners want to see you have skin in the game. One way would be for you to be the credit or sweat equity partner, but I generally find people who have cash tend to have good credit. 4. I find most lenders want to see cash flow and tangible assets before they lend to a LLC. Personally I think it will be easier getting your credit score up than trying to borrow through an LLC.
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    1. Fix and flips generate big chunks of cash. If you do a good job, meaning buy cheap, stay on budget and sell quickly for the expected cash. They can lose big wads of money if you mess up. I had a borrower default doing a fix and flip. I believe he lost about 30 grand on the deal. And fix and flipping is a job. You have to put time and effort into the job or you don't get paid at all.

    Rentals generate small increments of income. But don't require much work to generate that income.

    Both of these require you to have significant chunks of your own cash. So neither works very well if you have no money of your own.

    2. Nobody

    3. Save it up. Rentals are all about cash on cash return. Getting 10% cash on cash return is pretty good. Even if you can manage a low down payment deal, the extra interest charges from being over-leveraged eat up your income.

    4. Fix your credit. In order for your LLC to borrow money the lender will look at your personal credit and require a personal guarantee.

    5. I'd find one that is doing investor real estate loans. Opening a checking account is the first step to building a relationship.

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Nalo sounds like with no money you will have a very difficult time. Paying off bad debt that is existing and not an old collection account can be good. Private money and HML lenders want skin in the game these days.

    If you want to learnt eh rehab business you might do well to go work for a bigger flip company local to you. Learn from the ground up and when they see your work ethic and anything to win attitude they might eventually partner with you on one or give one to you to learn on. This is how you will get started.

    Hope it helps.

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  • Nalo Coban
    OP
    Real Estate Broker · Charlotte, NC · Member since 2014 · 129 posts · 12 votes
    12y

    Thanks for the responses.

    I will fix my credit so that I am in a better position to borrow. I found a private lender who is asking for 10%down. Can I take out a personal loan for the down payment from another bank? How hard/easy is it to transfer title to the LLC? What about that "due on sale" clause when transferring title...has anyone experience the bank wanting all the monies at once or do they really never care to be bothered? I understand you have to have skin in the game. I get it, but I keep reading about how to use other peoples money to get deals done, so I rather hold on the little I have for the unexpected...

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