My Lender/Agent Says I need 25% down

Private Lending & Conventional Mortgage Advice

My Lender/Agent Says I need 25% down

Rental Property Investor · Chicago, IL · Member since 2017 · 83 posts · 46 votes

Hello All,

I am trying to start investing with the BRRRR Strategy. I am looking into private lenders but my Lender/Agent says he's never heard of a lender giving you 100% purchase and rehab. I bought the BRRRR book and it doesn't discuss needing a 25% down payment?

Are their lenders out there that do these types of loans? Lets say I borrow $100k at 12% and 2 points. This 100k could be used for the full purchase price and the full rehab?

Please help me!

6 Reply

169 views

Most Popular Reply

Daniel Haberkost

Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes

Originally posted by @Samuel Liapis:

@Daniel Haberkost

Do you know any that do this? If not I will start searching.

I do but they're local to Colorado, call around, I'm sure you can find one if you call enough people.

On a side note, be very careful leveraging to such an extreme degree. If you have no cash on hand and no partners with cash you're taking substantial risk. You need to have contingency plans and extra capital for when things go wrong.

All too often, new investors with no money are the ones who want to leverage to a high degree when, in actuality, it's generally something you should only do if you have a healthy amount of liquid capital.

Real estate investing requires liquid cash.

9 Reply

See this reply in the discussion

55 Replies

Jump to latestLatest

Sort by

Samuel Liapis
OP
Rental Property Investor · Chicago, IL · Member since 2017 · 83 posts · 46 votes
6y
I'm very interested in this click link what is that and what company does that. Also if there are any Chicago investors that do BRRRR strategy would it be out of the realm of possibility for me to tag along during this process.
0 Reply
Samuel Liapis
OP
Rental Property Investor · Chicago, IL · Member since 2017 · 83 posts · 46 votes
6y
@Zach Gring do you know of any click invest places that will run me through the process or that I can tag along and see how it is done?
0 Reply
Zach GringPro Member
Realtor · Saint Charles, IL · Member since 2020 · 126 posts · 101 votes
6y
@Samuel Liapis

@Mark Wilton could get you started he has helped get some others started on their journey as well.

[email protected]630-373-2554
0 Reply
Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
6y
It's not common at all for anyone to provide 100% financing. I wouldn't do it myself if I were a lender.
0 Reply
Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
6y
This strategy is really difficult. It is incredible helpful once you get the hang of it and the appropriate expectations. We have 64 rentals, and by and large they have all been via this strategy...but it definitely isn't as easy as I feel a lot of the BP literature makes it seem to be.
All of our deals, we have either started with our money or the money of friends and family...which is private money at 8-12% and no points. We get several SFH - 4 unit properties, and then refinance as a package with a commercial lender.
We lay out a decent amount of capital on the front in...to later be reimbursed as close to 100% as we can possibly get. Sometimes we fall a little short, sometimes we fall very short, and throughout the entire process...our books look like we are 1-2 missteps away from going belly up.
This process pays off extraordinarily in the long run...but a lot of the negative or difficult aspects of it often get glossed over or ignored.
0 Reply
Mahauijue Mack
Rental Property Investor · Philadelphia · Member since 2018 · 24 posts · 9 votes
6y
@Ryan Ingram Hi Ryan would u mind sharing your commercial lender that you use to refinance your properties??
0 Reply
Samuel Liapis
OP
Rental Property Investor · Chicago, IL · Member since 2017 · 83 posts · 46 votes
6y
@Ryan Ingram
Thank you for not sugar coating. I understand to sell books you need to make it to good to be true and I see that is pretty much what he did. It is still something I am interested in doing but I think I need to take a step back and take more time. Maybe run through a few deals with another investor so I can get some practice in.
0 Reply
Mark Wilton
Investor · Mount Prospect, IL · Member since 2014 · 38 posts · 6 votes
6y
@Zach Gring thanks!
@samuel we have the ability to help investors through the whole BRRR pipeline. We do it here in Chicago and in Tampa. Happy to chat if youd like to learn more
0 Reply
Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
6y
Hey @Mahauijue Mack, they are all local here to the southern Ohio region and don’t lend outside of their immediate territory.
In this Ive found that smaller, local credit unions are the best to work with...where all parties are grossly familiar with the market, and expectations.

1 Reply
Mahauijue Mack
Rental Property Investor · Philadelphia · Member since 2018 · 24 posts · 9 votes
6y
@Ryan Ingram Ok Thank you
0 Reply
Patrick Menefee
Real Estate Coach · Charlotte, NC · Member since 2016 · 399 posts · 341 votes
6y
@Samuel Liapis i would strongly encourage you to step beyond the books. They’re an incredible guide and starting point, but a single book can never and will never include every aspect of real estate investing. Additionally, you learn far more by taking what you read as a starting point and learning the rest on your own
The bottom line is yes, you absolutely can get a property 100% financed. It may not all be from the same lender or same person though, which is where the difficulty comes in. The reason real estate investing is valuable is because it isn’t easy, it takes some work to figure out
You ultimately have a few main options, although the combinations are endless:
1. Get a good enough deal that a hard money lender will cover 100% of the purchase price. This is hard to find, but there are some lenders who will do 100% of the purchase price as long as it's no more than 65-70% of the ARV. You still will need to find a way to pay for the points and closing costs
2. Get a private lender who will loan on 100% of the price. However, unless you know someone who trusts you beyond a shadow of a doubt this may not be likely until you have some experience
3. Get some combination of private or hard money + a personal loan, line of credit, etc. This is the most likely up front
The bottom line is you need to do your research and talk to lenders in your area to give it a shot, but don’t count on one or two people or a book to play Siri and give you the exact step by step directions. There are options! You just need to get creative and pull them together
3 Reply
Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
6y
@Patrick Menefee play Siri, I love that. Hadn’t heard that yet.
Completely agree about creative financing. It is definitely possible.

1 Reply
Samuel Liapis
OP
Rental Property Investor · Chicago, IL · Member since 2017 · 83 posts · 46 votes
6y
@Patrick Menefee
I have to admit, I am little afraid of of the multiple sources of funding. Probably because it makes everything more complex. I was thinking about a private lender and maybe a HELOC along with the little bit of cash. But I think I should wait until I have more experience.
I also don't want to keep telling myself that and end up not doing it. I am pretty motivated at the moment and I really want to learn real estate. I have 2 apartment buildings and one is house hacked. I am searching for a third traditional type as we speak. Reason being is this is a family business and we are all using our first time buyers discount.
A lot of what I read says you need to get the experience by doing. So that is what I am trying to do.
1 Reply
Ryan IngramBusiness Member
Rental Property Investor · Dayton, OH · Member since 2017 · 246 posts · 225 votes
6y
@Samuel Liapis it sounds like you’re well on your way! Great job getting the first few deals under your belt!
0 Reply
Syed H.
Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
6y
Originally posted by @Jason Dillard:
That's not nice calling all my private lenders idiots
Please re-read what I wrote. I didn’t mention you. You said you’ve done 300 deals. Your not new at this. I said anyone who is giving a total new investor 100% financing is an idiot and won’t be in business long.

1 Reply
Dan DiFilippoBusiness Member
Real Estate Broker · Fayetteville, NC · Member since 2020 · 251 posts · 244 votes
6y
@Samuel Liapis I've done work in hard money. We still require something along the lines of 15-25% of the total project cost as a down payment. That way in the even of a default, we have less exposure. Think of it this way. If it's a $100,000 and it needs $50,000 in reno and has a $200,000 ARV (just for example), then if we only lend out $120,000 and the borrower messes up the project and we have to foreclose and sell, we can likely still recoup our project costs. The less we're in it for, the more likely the sale can cover what we invested.
[email protected]910-745-6972
Brookdale Property Management
Website View Page
2 Reply
Chidiebere Chimezie
Real Estate Broker · Dix Hills · Member since 2020 · 6 posts · 1 vote
6y
Hello, to my understanding you are looking for a lender that can do 100% of rehab, I can definitely connect you with one I work with, rates depend on experience I would like to connect with you, how soon do you need to close?
1 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
First time investor seeking 100% financing inquires online about how to do so. Stranger offers an introduction to another stranger who can provide such.
No way this goes wrong...
4 Reply
Phil Bach
Investor · Tampa, FL · Member since 2015 · 76 posts · 55 votes
6y
@Mark Wilton I have a rental property in Tampa Bay that is seasoned and ready for a refi. Sending you a PM now
1 Reply
Account Closed
New to Real Estate · San Diego, CA · Member since 2020 · 25 posts · 4 votes
6y
@Samuel Liapis
Are you talking about David Greene's BRRRR book?
0 Reply
Rumbi Chakabva
Realtor · Fort Wayne, IN · Member since 2016 · 14 posts · 8 votes
6y
You may need to do a HELOC or partnership with someone with cash for the project. They offer 100% and you offer expertise or split the cash contribution to what you have and you can work out a deal.
0 Reply
Mikael Winkler
Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes
6y
@Samuel Liapis
I am currently working with a hard money lender that did 90% of project cost at 11.5% interest. By the time all the closing fees, etc were added (they did charge a 3.5% origination fee), I had to bring closer to 15%. However, that’s much better than 25%!
Or, if you're willing to house hack and live in the property for a period of time, you can utilize FHA at 3.5% down. If you do renovations, you can always refinance and move out before that year threshold that FHA requires.
0 Reply
Phil Bach
Investor · Tampa, FL · Member since 2015 · 76 posts · 55 votes
6y
@Samuel Liapis
Keep in mind, before Covid-19 institutional lenders were going bonkers funding 90% of purchase + 100% rehab and such.
As soon as the stock market took a dump and people started getting laid off these lenders shut their doors pretty quickly and are just now starting to get back into it. Except now the typical LTV is much lower, as low as 60% LTV.
As many others have stated, you won’t find somebody to just front all of your costs from the get go. You’ll have to build a track record of success, and as you progress you’ll find better deals and you’ll be able to negotiate lower down payments.
Patience is the name of the game with the BRRR method.
0 Reply
Jason Dillard
Real Estate Broker · Greer, SC · Member since 2013 · 548 posts · 271 votes
6y
I am afraid yall are missing the point. Maybe this can help:

Purchase info of 50k and loan amount of 85k from private lender.

Current Listing is UC at almost full price.

http://greenville.paragonrels....
0 Reply
Sam B.
Member since 2019 · 106 posts · 32 votes
6y
@Daniel Haberkost
If a lender gives you 100% and you have no money and nothing to lose, what’s the risk? The loser in this scenario is the lender not the borrower in my opinion
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.