Private Lending for Turnkey Properties?
Hey BP!
Over the last month and a half, or so, I've been deep in the rabbit hole that is Turnkey Investment Properties. I've seen opinions strongly for, against, or just indifferent on the topic, but that's not what I'm looking for with this post.
Given that I live in Seattle, and I don't know enough quite yet to source, rehab, and tenant (BRRRR) a property on my own yet, it makes sense to me to look at out-of-state turnkeys. I have a $100K HELOC (I bought at near the bottom of the market here in Seattle, so this doesn't leave me overly exposed) that I've taken out with the sole purpose of using it to purchase cash flowing rentals. Long story, short ... I've found two turnkey properties (one SFR, one Duplex) in Birmingham that I'm under contract on right now. I found them through a Marketer/Promoter, and became really comfortable with the actual provider and the management side of this particular company. The provider is reputable, and the numbers pencil out decently even with the HELOC payment factored in ($238K combined purchase price, $2750/mo rent ... $300/mo NET cash flow), so I'm comfortable with it.
Here's what I'm trying to figure out, and would love some help. I've found a couple of Turnkey providers that appear to be reputable that offer the ability to jump in on the front-end of the process, and fund the purchase and rehab part of the deal. BUT ... you have to be a cash buyer. Doing it this way would save me thousands of dollars going into the deal, which of course would increase my returns. I love the idea, since I'm a well qualified borrower and can refi the property after it's tenanted and performing, and it gives me many of the effect of the BRRRR strategy.
My problem is that I could likely scrape cash together to do an all-cash deal, but I wouldn't be able to do these kinds of deals at the speed I'd need to in order to reach my passive income goals within the time frame I've set for myself ($6K before March of 2021, if you're wondering). I'd probably have to do them so slowly (MAYBE two a year) that it probably makes more sense for me to just take smaller returns on a larger number of deals.
So, as my topic name suggests ... what are my chances of finding private money out there to fund the purchase & rehab costs, where I'd be getting the Private Lender his/her money back in 3-6 months, or at tops a year? I'm not expecting to find private money right now, while I only have one accidental rental, and two turnkeys under contract. But once I have multiple properties under my control, with the same provider, and can show a proof-of-concept of sorts, could I find a private lender to lend that money for 3-12 months?
That's a bit of a novel, I know! But it's a thought that I've been throwing around in my mind, as I try to figure out a way to add some extra juice to my efforts to escape the rat race.
Thanks!