Real Estate Agent · Schenectady, NY · Member since 2022 · 88 posts · 86 votes
Hey everyone, I'm in the refinance step of my first BRRRR and am thinking about how I can fund my next deal. I had to put about 25k of my own money into this first deal between the down payment, agent commission, inspection, closing costs, and holding costs, so I'd like to get as much of that covered as I can on my next deal. I'm familiar with how a hard money loan is structured, but structuring a deal from a private lender seems like the wild west. Is it purely interest? Points and fees like a traditional bank? Obviously would change from person to person, but I'm curious what people have used before that has been effective for both parties.
Ultimately, my vision is partnering with a private lender so I can spread my funds across multiple deals at once and scale quicker; I'm really happy so far with my agents, contractor, and refi lender, so I feel like getting a great lender would be the next step for me. Thanks in advance!
Use a private lender for your down payment/closing costs, and a regular private lender for the debt. Terms for the private lender will vary. Some will just charge you the interest, some will charge interest + points, some will just want a % of the profit at sale/refinance.
Hey everyone, I'm in the refinance step of my first BRRRR and am thinking about how I can fund my next deal. I had to put about 25k of my own money into this first deal between the down payment, agent commission, inspection, closing costs, and holding costs, so I'd like to get as much of that covered as I can on my next deal. I'm familiar with how a hard money loan is structured, but structuring a deal from a private lender seems like the wild west. Is it purely interest? Points and fees like a traditional bank? Obviously would change from person to person, but I'm curious what people have used before that has been effective for both parties.
Ultimately, my vision is partnering with a private lender so I can spread my funds across multiple deals at once and scale quicker; I'm really happy so far with my agents, contractor, and refi lender, so I feel like getting a great lender would be the next step for me. Thanks in advance!
There are definitely a lot of ways to structure a deal, and several abstract factors can come into play. To make things more concrete, it helps to get specific. For example, sharing details like an example property address, how much of your own capital you're able to contribute, your goals for the property, and what your exit strategy looks like can all help potential lenders better understand the situation and make informed decisions. The more clarity you can offer, the easier it becomes to align with the right financing strategy.
Good morning, hope you had a good weekend. Credit score and experience level are the key factors to how much leverage we can provide you. the standard is 80% of purchase and 100% of rehab and those deals are the easiest and fastest to get funded. We can possibly increase leverage to 85/100 starting with your second deal. 90/100 comes after 3-5 exits. Hope that helps
Use a private lender for your down payment/closing costs, and a regular private lender for the debt. Terms for the private lender will vary. Some will just charge you the interest, some will charge interest + points, some will just want a % of the profit at sale/refinance.
Use a private lender for your down payment/closing costs, and a regular private lender for the debt. Terms for the private lender will vary. Some will just charge you the interest, some will charge interest + points, some will just want a % of the profit at sale/refinance.
I think this is exactly what I was after. My first hard money loan was actually pretty solid. I got a 90% LTV 100% construction loan on a 75k property. I have a good relationship with them so would like to keep going there. But if I get a general loan for the 25k in down payment, closing costs and holding costs I put in that would be electric.
Where did you go for that piece of it? General business loan from your local bank? An individual?
I've seen investors use credit cards with a 0% APR promotion, business loans, but most times they have someone in their network privately lending them those funds. It gets tricky to get deals to pencil out with 100% financing essentially, so you would want to make sure you're all in at no more than 65% of the ARV and have a deal you can be in and out of pretty quickly especially if you're using something like a business loan or credit. I don't necessarily recommend this unless you're experienced. A lot of not so great stories.