When to secure financing in the timeline of a residential deal?
Hey BP Community,
I own my primary residence and am working to buy my first investment property (currently looking in Long Beach, CA. I live in Santa Monica, CA). One thing I’m a little turned around on right now is weather I should be focusing on financing or finding a deal. I’m currently doing a bit of both in parallel.
On the financing front, I work a W2 job earning a solid wage and have a traditional loan through Bank of America on my primary residence. That mortgage along with a car payment is my only debt. I have about 30k of my own cash I’d be comfortable spending towards the investment if needed, and could get about another 40k via a home equity loan (this 40k # coming out of a conversation with Bank of America).
My initial thoughts on raising the funds needed for an investment are to speak with many large and local banks to explore my loan options, and to solicit friends and family who have raised interest in investing with me if I find a deal. I also may have a rout to access more significant capital via a partnership I’m exploring.
So where should my time be focused right now? The options for financing are numerous – do I need to lock down more clarity on where my money is coming from before I spin my wheels finding a deal? That way I’m ready to jump on a deal when I find it in an active LA market. Or can I not have a serious financing conversation until I have a deal to bring to the table? Can I be submitting offers on deals w/out my financing perfectly known, and then use the contingency period to lock down funds?
I want to be efficient and professional so as not to waste other people’s time and energy.
Thanks in advance for your help!