whats your gut on this new service...

13 Replies

I have thought a new service which could offer landlords cash to spread the cost of big ticket expenses over 10months. You think there is any mileage there??? Or do you think kost contractors spread the cost anyway -so no one is going to pay for this>??

Thanks

I think that could work @David Barnett but what is your security? You cant go in and pull out somebody's furnace if they dont pay. You could do a 10+% interest unsecured loan I guess. Id be interested in a deal like that in an emergency. 

There are plenty of places that already provide this kind of service.  I bought windows interest free, 24 months from Home Depot and a new Furnace and A/C financed through Synchrony Bank for 12 months, no interest.  Lots of competition for you if you decide to go down this road, but clearly there is a market for it.

Good luck!

I think your bad grammar,mis-spellings, and incorrect idiom made my eyes hurt.  While I'm not usually the forum troll pedantic grammar enforcer, please don't post such poorly written questions on the forum, the moderators are likely to ban you for it.

Well we don't ban people for poor spelling or grammar.  Nor do we even remove such posts. 

How would want you're proposing be any different than a loan?  

Guys

Thank you so much for your replies thus far. Really really helpful....

Let me start by apologizing for my poor grammer- rushed out the office without reviewing properly. 

The idea is to effectively to steer away from actual product financing and move into spreading the cost of contractor bills. 

The Contractor is paid immediately without having to wipe out cash flow for the month or having to attempt to negotiate a payment plan.

USP would be instant approval on a non recourse loan, minimal paperwork and no credit scoring. 

Let me know you thoughts -once again thanks so much for this!!

Dave

I think there are a number of options currently available for this situation.

As mentioned early vendors often offer some type of financing option. If the landlord has significant equity - a HELOC would be an option.

Peer-to-peer lending would be a possible option - Prosper or Lending Club are the most popular.

With these readily available options, it might be difficult to make such loans profitable.  Getting collateral would be difficult.

At first thought it seemed like there might be ways to incorporate it into a property management company, but I think the compliance and potential liability would outweigh any benefits.

David, that is what banks do, it's called factoring accounts receivables. The contracts and accounts become the collateral as well as other assets. You will also have lending regulations to deal with, not an easy area to start in, it's commercial lending. :) 

Bill, Jesse et al,

Its a tight market for sure - and getting a lending license is expensive and timely. 

I am wondering now if the loan was to spread relatively smaller amounts - say for example a Painting Bill for under $2k or a Plumbing Bill for $1,500 -whether or not there is sufficient demand for this service amongst Real Estate Investors? Or is this facility just too small and easy to gain from peer to peer etc..

I do this for property management clients. Expenses between $300 and $1000 (more than that they need to have a check ready), I'll front the cost and charge it to them in installments. It's a good marketing tool, but I don't really like doing it. Not worried that I won't collect my $ back, but the bookkeeping gets complicated and I worry I won't remember to collect all the payments.

It's just something I started doing because one owner couldn't afford to fund an operating account and had trouble covering her note if too many repairs came out of rent. I don't charge a fee, guess I should.

Originally posted by @Casey Kleinhenz :

I do this for property management clients. Expenses between $300 and $1000 (more than that they need to have a check ready), I'll front the cost and charge it to them in installments. It's a good marketing tool, but I don't really like doing it. Not worried that I won't collect my $ back, but the bookkeeping gets complicated and I worry I won't remember to collect all the payments.

It's just something I started doing because one owner couldn't afford to fund an operating account and had trouble covering her note if too many repairs came out of rent. I don't charge a fee, guess I should.

If you charge for the services specifically, you might be in the realm of financing vs. making your property management services more appealing.  

Would the service providers be willing to do it for your clients directly?  It would be a small hassle for them, but you could make them your first call for the service in return.