100% Asset Based Lending?

Question

Hey All,Anybody have access to or know of some asset based lending programs?? Due to my age and DTI out of college, i'm having trouble landing lenders for rehabs by myself. I'm an architect by trade, and have completed 2 deals previously in a partnership, however can't make a splash on my own without some funding help. Does anybody have any information on 100% asset based lenders (or any asset based lenders for that matter) in the Houston market? Obviously this type of lending may be partnership styles with a percent of profits rather than percent of loan and that's totally fair with me. Do you know any other routes to navigate this speed bump? Thanks for any information in advance!Best, Kevin Domschine

Rob Massopust · Answer

100% Deals sound great but in actually can get you in trouble.

If you do not have the funds to debt service a HML or if you can resell the property or refiy the property, that 10% loan to debt service will eat you alive.

If you find a deeply discounted deal then team up with someone and split the profits. Most deals are hard to get a big enough discount, at least in my market - S. Cal. but the big guys are getting them but they have the cash to do so.

I would look at finding a property that is not a major fixer but one that you can get with an FHA or Fannie mae rehab loan as an owner occupied. you can even get a co-signer.

Look at my last post here:

https://www.biggerpockets.com/forums/61/topics/732543-here-is-my-adu-variation-to-brrrr-its-called-bra2xrr

Andrew Postell · Answer

@Kevin Domschine assets based lending is totally possible and as mentioned above it will depend on the property type what type of loan you would receive.

For example, if you were trying to purchase a rehab a single family home, then a hard money loan would be an asset based loan that could be used.  In general, HML will lend 100%....if you are purchasing and rehabing at 75% of the After Repair Value (ARV).  For most of us in Texas finding a property that fits 75% or lower is somewhat difficult but it is entirely possible to find one.  Feel free to post in the Texas forum for this loan type since you know what you need.  There should be some good locals that can recommend some lenders to you there.  Good luck!

Jacob Sampson · Answer

I've never used one but generally asset based lenders are going to be looking at larger deals.  Also, just because they are lending based on the asset doesn't mean they aren't going to want to look at the capabilities of the person they are lending to.  For example, if I were to purchase a 200 unit apartment complex for 10 million the lender may loan based on the asset but they are still going to want to know I can handle a property like that.

Because no asset makes profit by accident.  You have to be able to manage your way into profit.