Can a wholesaler use asset based lendinb

Question

Over the 4th of July weekend I had a idea of doing some fix and flips on my own. I did some research an came across asset based lending an reached out to a lender an he stated that your Fico score dosent play a role. So could I use this as a wholesaler?if so I had the following questions

-What should I expect?

-what would be great terms and condition?

-are they In charge of the flip an bringing their own contruction crew?

-any recommendations?

-any red flags to look out for?

Chad K. · Answer

Account Closed I'm not for certain when they will take there points I'm assuming they will take all their fees/points after I close with a retail buyer but I could be wrong I'm still in the early stages of researching the process, as far as financials he wanted to know things like purchase price, an I was going to provide comps, how fast homes area are being sold an a few local licensed contractors rehab estimates. Since I'm going to fix and flip I don't think I would need cash flow unless I decide to buy and hold the property.

Chad K. · Answer

Account Closed yeah I know transactional funding won't give me the time to fix and flip plus I think they need to know you have a end buyer before the release the funds. I talked to a asset based lender an he give me some simple questions to answer in order to qualify...but I may look into some options with transactional funding maybe they have lenders that will lend for longer that 24 hours

Chad K. · Answer

Account Closed thank you for your feedback I did a little research an talked to a asset based lender that allowed me to use properties I get under contract just by answering a few questions to qualify the property I'm not for certain if those same interest rates apply for homes that you discussed on stock and mutual funds

Account Closed · Answer

ok so you need private lending basically or hard money but they will want points up front is that an option? Do you have financials that back up your cash flow some can ignore the credit.

Account Closed · Answer

I believe transactional funding is only 24 hours.

Here in IN and IL we can double close use B buyers funds to purchase for A buyer essentially.

Account Closed · Answer

So you want transactional funding? Or to buy and resell properties?

Duane Ortega · Answer

Account Closed

Transactional funding is a form asset based lending provided you already have an end buyer.  There usually are no points or fees upfront and everything is taken on the back end.  Google transactional funding and look at their "How it works" and "FAQ" pages.

Hard Money is another form of asset based lending which seems to be of interest to you.  I have a friend who is a hard money lender and usually, they take points upfront 4-6 points (or less if you have an established relationship) and 10-14% on the back end.  Your FICO does not necessarily come into play.  The qualification for Hard Money should really be called "it depends" as everything depends on the scenario you present.  In a nutshell, the less risky you make it for the lender, the more favorable they look at your request.  Additionally, if you are an experienced rehabber, there will be less red tape in general.

Good luck.

John Daley · Answer

Asset based lending is one of the best ways to fund wholesales and rehabs.

I have explored many different kinds of funding, and asset based lending can be much cheaper and more flexible than other common methods.  Basically, you need to have assets to borrow against (stocks, bonds, etc).  Lenders will typically give up to 65% of your cumulative assets and rates vary from 3-6%.  I utilize asset based loans as the primary source of funding for my business in the form of an open line of credit.  This way you pay roughly a point to open the line of credit, then pay monthly interest payments only on the funds you withdraw to use until you pay it back.  In my experience this is the most economical and efficient way to fund deals.  There is a minimal fee to renew at the end of the year, but it makes so much more sense than paying multiple points and double digit interest rates for each and every deal you find.