How to Acquire Non-Traditional Money for an Investment Purchase

Question

I just moved to Tampa, FL, started a new job as a real estate agent, and am loathing paying rent, because it's nearly $2k a month I will never see a return on. I don't qualify for a traditional loan, because of the lack of 2 years commission income. So, here's my question: How would you acquire money to buy a home as a temporary residence, potentially flip, or rent out and add to your portfolio?

Nicholas L. · Answer

@Caleb Sonneman I would just start calling lenders until you find one that will lend to you.  Call 100.

Michael Haynes · Answer

Hello Caleb Sonneman starting out as another one of the Million, RE Agents we have in Florida. You decided on the hurricane devestated, Ft. Myers to work? Did you ever hear, "The reason I rob Banks is because that is where the Money is?" Did you talk with a Banker to try to get Pre-qualified for a Loan? This is Florida. Do you know how to meet a friend with good Credit and the Down Payment? If you are a loner, you can look at all the Youtube videos on "How to Make Money with Mobile Homes." There is one nice place on a Highway near Plant City that Finances to Buy, Land and the Box. My old friend, Richard, started out 40 years ago buying Single and Doublewide Homes, on individual Lots with Septic and Well. He had 90 of them 20 years ago, all over Hillsborough County, plus a couple small Parks. Buy a Lot. Buy a used Box. Have it moved. Set up the Septic and Well to live in or Rent. He quickly got to Jumbo Loans and then All Cash and Self-Insured for years. Who cares about the Box? They go down in value more than anything. It's the Lot that has the value and if the Big Bad Wolf comes along and blows it down, who cares! Richard has always Self-managed 24 hours a day with a couple handymen. He wanders around all day and night with ten and twenty thousand, smoking Marijuana keeping up with the rents and repairs. I started out 40 years ago with Duplexes and Houses, Financed by the Owner. Good luck with finding that now.

David M. · Answer

@Caleb Sonneman

Hard money does not allow owner occupied either. Short term, high rate loan for your fix and flip.

If you try to “pool” money then it becomes a Syndication or similar requiring sec filings, blah blah.  I stay away from it

Sorry. It’s hard to “invest” when you have neither the income to leverage nor the wealth on hand.

Happy to chat. Good luck

Caleb Sonneman · Answer

Thanks David. DSCR does not allow owner occupation. So with hard money, the big con is a higher interest rate, correct? My hang up with private money is am I looking for one person with tons of capital willing to trust me, or do I pool a bunch of people together and give them all a percentage each month?

Nicholas L. · Answer

@David M. fair point, but with a post like this... people have usually called 1-2 lenders, or made 1-2 offers, and gotten discouraged.  i sometimes have to call 25 contractors to get a few bids.  he said "I don't qualify," not "10 lenders have turned me down."  But only he knows what he's done so far =)

David M. · Answer

@Caleb Sonneman What did you do before?  Was there a significant break in employment?  If you can show some sort of reasonable continuity then your prior income would count.

obviously, its pretty risky..  But you could try a brrr with hard money and perhaps refi with a dscr (I forget if they allow owner occupation, however:  probably not).  Of course, you'd have to find such a deal, and actually be able to make it for the refi, which doesn't always perfectly workout, unlike the videos would have you believe.  But, theoretically the brrr could just be a flip with hard money and you could try generating some cash/income that way.

Then, there is just "private money..."  Get an "angel investor" to back you.

You could try your local reia and see if there is anybody you could partner or back you...  I don't think its nearly as easy as it sounds, but thats just one of the techniques.

David M. · Answer

@Nicholas L. Seriously?  Have him keep calling lenders when he says he doesn't qualify?  Its just his time?

Raymond J. Rodrigues · Answer

Hi @Caleb Sonneman, I may know of a few options available to you. Happy to connect!

Tom S. · Answer

@Caleb Sonneman  There are non traditional options out there such as owner / seller financing.  I did a bunch of my first deals that way.

Caleb Sonneman · Answer

I like it! Thanks

How to Acquire Non-Traditional Money for an Investment Purchase

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