How to avoid leaving your own money in a deal when financing??

14 Replies

Hello BP,

Im trying to buy and hold a new property each month using financing. However most banks will only loan 75% LTV and its very difficult to find homes in this current market that are below 90% LTV which would mean I would have to leave at least 15% of my own money in each deal. Eventually I would run out of money and wouldn't be able to buy anymore

When owner financing is not an option...

Can anybody advise me on a strategy or work around so that I cant keep the wheels moving and buy every month.

Thank you for your help

Hi @David Kerner

I coach creative financing which includes sub2, wraps, lease purchase, lease options, joint ventures with sellers on minor rehabs and more.

Google "Brian Gibbons creative financing biggerpockets"

Hi David, I congratulate you on your goals. If you are dealing with banks or PMLs I can’t think of the way to reduce your down payment. However there is the way to pull part or all the capital out upon refinancing. To achieve that one has to increase value of the properties by buying heavy fixers or the properties that one can increase value of by adding extra bedroom or bathroom or both. If it is done right, in the right neighborhood, one should be able to refinance and reduce your capital locked in the property. No free lunch! You want to pull your money out you have to work for it by increasing value of the property so that lender sill has its protection.

Good luck,

George

Originally posted by @David Kerner :

George,

Thanks for the reply. As much as I dont like what Im hearing....its the reality of the situation.

 Yep. No-one likes hearing that there is no free lunch. Truth is, Banks need equity too. All the best...

What is very disappointing is that all of the wholesalers I am coming in contact with think that they are offering the properties to me at investor prices (75% ARV).... when in fact they are picking up their properties at 90% ARV and trying to pass them to me at 100% ARV.

Pay yourself a bigger commission? 

There are no regulations on commissions.

That will help boost the COMPS too for future appraisals on your property.

Push the sales price as HIGH as possible, pay your self 5% commission with a $10,000 bonus.

The seller will get the same NET, you get a bigger paycheck to fund your portfolio AND the neighbors will all love you. : ) 

Originally posted by @Lisa Hoover :

Pay yourself a bigger commission? 

There are no regulations on commissions.

That will help boost the COMPS too for future appraisals on your property.

Push the sales price as HIGH as possible, pay your self 5% commission with a $10,000 bonus.

The seller will get the same NET, you get a bigger paycheck to fund your portfolio AND the neighbors will all love you. : ) 

 In what universe do you think a buyer will be willing to pay $10,000 plus 2% over market value, just because the seller decided to ask more than market value? The sale prices are the result of the market dictating price, not the other way around,LOL.

@David Kerner you have all you need. 

  • I know of national HML that loan up to 85% of purchase price and cover 100% of the rehab (Under 75% ARV).
  • You would be able to rinse and repeat the Buy, rehab, rent, refinance, repeat option until you get tired of doing so. (You get that 15% and closing costs back)
  • Just connect with a commercial lender/local credit union that does not have restrictions on cash out refinance time frames. 

I see that this post is a year old, any luck since then?

Hi Don,

It happens in my universe. The buyer IS the real estate agent... the question" was how can a realtor buying a property for him/herself " improve their buying efficiency and hang on to more of their investing capital.