Need Advice for leveraging private money

2 Replies

I've recently cut ties with my equity partner (50/50) in flipping houses and want to do it on my own. I have a few family members that are willing to lend me a few hundred thousand dollars (for about 10% ROI). However, that will go pretty quick in one or two deals. My long term goal is get more buy and hold investments, but need to flip some houses as well to generate more capital. I have some cash of my own and about 200k in equity in some other rentals I own. How can I leverage all of this to create the most profitable investment strategy for growing my real estate portfolio. I guess I need some advice from seasoned investors or Private money lenders, etc. Thanks in advance

@Mikki McIntyre The model that I advocate is, starting with a pot of cash in the amount to cover the down payment, closing costs and reserve requirements for a hard money loan on the average size or maybe the largest size purchase you would do as a flip or a buy and hold. 

Buy & rehab the property with that money. When the rehab is complete, decide if your going to flip it or refinance it to a conventional loan and keep it. If you flip it, you get your profits, pay your taxes and the rest of the money can go towards your next deals and some in your pocket?

If you decide to keep it, you can do a Fannie Mae cash out refinance up to 75% once you have been on title for 6 months or more. Assuming you got the property at 50-60% ARV when you bought it, you should be around 75% ARV after the rehab, so if that's the case, you get all your money that you put into the deal with the hard money, back out with the Fannie Mae refinance.

Now go rinse and repeat as many times as you want? When you get to 10 Fannie Mae financed properties, look me back up and I'll show you the proper way to structure things so you can effectively get as many Fannie Mae loans as you could ever want?

So with all that said, how much do you need to start? Well figure 20% of the purchase and rehab costs + closing costs + reserves. Typically if you have 55-60K to start, you can take down any home 200,000 or less. If you want to run multiple projects at once, just double your starting pot of cash. 

That's is a sustainable business game plan right there. Now just go execute it!!!

Kevin,

Thanks SO much for your advice! I will do exactly that. I appreciate you taking the time to help out someone like me just getting the ball rolling. Thanks! Mikki

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