Advice Needed: Private Lenders in Florida

5 Replies

Greetings to all,

Please help!

I recently began my firm's organization with the goal to acquire several vacation rental properties in Florida. 

My objective is to build a portfolio of 5-10 exceptionally managed rental homes and stabilize the portfolio within 18 months of initial acquisition. 

My exit strategy is to either (1) Sell the portfolio in years 4 to 5, (2) Cash Out investors by refinancing, or (preferably) (3) Hold and leverage the stabilized cash-flow from the portfolio to raise capital to commence the second portfolio in another region.  

I am seeking advice to finance and acquire the first several properties.  I have a tremendous and well executable business plan - I need help getting started.

Specifically:

1.  Debt Vehicle - I/O, Conventional, Home Equity, 100% Private Equity? My assumption right now is the interest only, with right terms, would be best for the first several deals.

2.  Equity Partners - I have a meaningful amount of equity to contribute as GP and am seeking an LP to partner with me on the balance. I do not need cash flow immediately, but need help with covering the balance of equity down to acquire and execute my improvement strategy.  Therefore, I am concerned solely with a smooth scale to portfolio stabilization and the return of capital to investors. I am willing to sacrifice income initially in exchange for operational success and deal security.


Would anyone be able to help me out with strategizing financing?

My models and business plan are airtight. I have been in residential (SFR,MF,SH) real estate for 10 years. I started out in the trenches leasing apartments and eventually (on-site) managing large-scale commercial multifamily renovations in L.A. I made a logical progression up through asset management and finally to acquisitions for a private equity firm.

I realized I was delivering the true value to my firms' investors and was not justified in my salary. It became clear I must acquire equity in deals, use my management skills to destroy competition, and then reinvest my sole earnings early on in lieu of ultimate freedom and success. 

I am looking for some mentorship and someone to help me get my first deal or two under my belt. 

I really appreciate any and all advice. 

Best regards,

Patrick Milhaupt

Where in Florida are you looking to purchase?

How do you plan to rent the homes?

Getting private equity for vacation rentals is hard, they usually like to see long term leases or proof of income of the home in the past 1-2 years. 

Marc,

Looking between Panama City and Destin.  Reason being that it is reasonable driving distance from Tallahasee and Atlanta for a weekend trip. Santa Rosa at a good buy in is perfect.  $400,000 is the sweet spot.

I have vetted out every single marketing software suite out there and have a final three I really like. I also have my own website which the marketing distribution software will read off of.  The pricing will be adjusted in real time based on the comps that I choose and the market availability at that moment.  I integrated the same dynamic pricing software into my apartment portfolios in prior roles. Its actually quite easy but property management companies will make it seem complicated and charge 18%. I have other software integrations for customer service and maintenance, which I have quoted an average of 5%-6%. I will handle all other property management and the accounting will be autonomous and digital.

Say I am looking at a $400,000 place. Do you think a lender would do 10% LTV I/O?

I just need to get the first two rolling, but ideally if I found a partner who understood the value it would accelerate clip rate. I have a firm that has a large portfolio of managed vacation rentals across the globe that offers one to three year leases with a proven 12 months of cash flow.

Originally posted by @Patrick Milhaupt :

Marc,

Say I am looking at a $400,000 place. Do you think a lender would do 10% LTV I/O?

I just don't know of any lenders, even private, that will do 90% loans to investors. Then you add in vacation rentals and it becomes even more complicated. 

How far from the beach is $400k getting you? That's going to be very important in these markets for vacationers. 

Hi Patrick. There are some great private money programs available for purchases in Florida. As you continue your search, you will find that most private lenders are between 75-80% LTV of the appraised value. The minimum loan size is typically $75k with a $20k minimum down payment requirement from the borrower. If these parameters work for your investment strategy, they you will definitely find a private lender to work with you.