Help with financing

10 Replies

Hey Guys,

I am based in Los Angeles and I have a 4 properties because of people like you on BP teaching me RE. I am looking for financing more deals to provide financial independence but I am having trouble to where it makes sense. 

Hard money lenders are asking anywhere from 10%-20%

I do not have 20%-25% for the down payment available. 

Typically people in Los Angeles do not sell with seller financing. 

I am waiting to build equity in the other properties to get a LOC and use that towards a purchase of a new multi-family home(MFH).

I know I am asking a question which is out of norm, but I assume others are having the same issue. 

I am looking at MFH near USC which are 400K-800K. 

I appreciate everyone's response to this. 

If you're married, maybe time to put properties in your wife's name.  We have done that and doubled our allowable loan limits.  

If you're single, probably time to house hack that new plex.   Owner-occ 5%ish down payment.  Rent out your current primary if you have one and get a 4 or less unit multi residential.

Will mention the best lender in CA I know of.....  @Chris Mason

Thank you @Steve Vaughan !

I am married (now), the previous prperties are under my name. 

The area I am looking in is for investment purposes only everywhere else is over priced. The properties near USC are under 4 units so they are Resi loans. If I find a occ property it would need to be in a better area but would cost over 1M UCLA, Century City, Culver City).

Please elaborate house hack?

What about private money.  This is what I am currently looking into.  Raising money from private lenders.  You could raise just enough for the down payment or for the whole thing.  There are lots of ways to structure it.  You can do it as a loan or as a partnership.  I am still very new to the idea so I am nowhere near an expert but there is tons of info on here about it.  Search "private money."  It gets more involved when you get the funds from multiple people and have to form a syndication but as long as you education yourself on the subject (Which is what I am trying to do now) you can do it.  Many others do every day!

Hi @Michael Badin

Thanks for the wealth of information. I will search into this I feel like there has to be a way to get a private lender to work as a partner in RE. 

@Edward P. private/hard money is best suited for a deal you can steal or add significant value to.  In order to scale you need more partners and a bigger team. Happy hunting!

Originally posted by @Edward P. :

Thank you @Steve Vaughan!

Please elaborate house hack?

 'House hacking' in a nutshell is owner-occupying a house or plex and renting out rooms of the house or the other units of a plex.  

I'm still 'hacking' with a wife and 2 boys, but it's a mother-in-law unit down in the lower corner where we hardly see the neighbor.   Not a typical 'plex'.    It's easier for single folks or newly married that can rough it a little more without kids yet, in general.

@Edward P.

Are you looking to do any rehabs on these properties? If so, you could employ the BRRRR strategy and get in with the 10-20% low down payment hard money lenders, do the work, and then refinance out later.

Or if it doesn't need any rehab, you could get some kind of bridge financing (with the same low down payments), add/raise rents, and then refinance.  Bridge Financing terms are usually 1-2 years.

Thank you all!!!

@Ivan Barratt Hard money loans are at a higher percentage and the  cap rates I am seeing near USC do not justify.  For example this Property ($569K, rent roll: $3,450, mortgage would be about 2,500 not inc other exp.) I am not sure if it is worth getting a 10%-20% hard money loan. Let me know your thoughts.

@Steve Vaughan I would love to be a owner occupied near UCLA (looking for duplex) but they are about 1.7M-2.5M. I do not have the down payment because I would love to have at least the mortgage paid by the renter.

@Nghi Le I plan on buying and holding on to them. I will repair before new tenants move in, its hard to find a vacant unit in these properties near USC. I understand the BRRRR strategy but is it worth it for the property above? What are the terms for a bridge loan?

Appreciate everyone's response.

@Edward P.

Sorry for the delayed response; I missed the alert for this!

For bridge loans, I'm seeing rates of 6% - 12.5% (interest only), 80% LTV, 1.10 minimum DSCR.

Ultimately you'd have to run the numbers to determine if it's worth it... but I tend to follow the 1% rule, even on the west coast.

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