Creative Real Estate Financing

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Angel Nieves
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business line of credits, credit cards, loans

Posted Jan 28 2022, 07:06

I met an investor who is actively flipping

He introduced me to his business and showed me his model / operations and some recent deals he closed on in the area and he is making some nice profits

He gets tons of deals everyday in his inbox. Sellers selling their properties, wholesalers wholesaling, Realtors sending him deals, everything. its like an engine that works 24/7 and I’ve seen his inbox and he has tons of deals to make offers on. 

Once under contract, he already has his team in place and it’s a streamlined process till closing. Very straightforward, duplicable model / system he has 

He is willing to bring me on, show me the ropes and show me the business in and out and how to build a business like he has and bring me on to his network

He does not use his own money to buy and fund his deals, he uses private money instead

So here is my concern …

He doesn’t want me using my own money either. So the first step is to get funded. Once I’m funded, I can now use a/his private money lender because My fund or “reserves” shows the private money lender I am financially capable of doing a project.

That’s really what the fund is for. To paint a picture to the lenders I have money so im not using my own capital. The fund is for holding costs, the rehab and all the miscellaneous things that come up in a flip.

So here is how the funding works, 

He put me in contact with one of his partners who his company uses and they help start up business (such as flippers) get funded through unsecured lines of credits.

These people are consultants who arrange financing on your behalf and they find you different financing options by presenting your information to different companies to submit for loan requests, Loc’s, and Credit cards. Then, they come back and tell me what I can get approved for based on what offers they got back and the amount I’m looking for.

It’s like they cast the widest net and see who has the best offers and terms based on my info 

so I’m approved for up to $150k. No collateral, No pre payment fees also I did not have to verify how profitable my business is because it ain’t, but this is what they do. They help get you funding. If I were to go through a bank, I would not get near that amount

So now, that $150k is my “reserve” and from here the investor will show me the A-Z process since im funded. Getting deals, Running numbers, submitting offers, getting private money and putting me on to all his resources and network the uses to do a flip project to build relationships. It’s all one on one with him, he'll be guiding me. 

I’m also licensed so I can sell my own flip which is plus. 

I am also not sharing a profit of the deals with him either. I can, if we jv on them or he does the flip for me but He wants me to keep as much as possible so hell teach me but this is not like 50/50. here is how he gets paid, Once I’m funded $150k, he takes $5k out of that and when I sell my first flips he takes another $5k. he takes $5k after to show he is invested with me but That’s it. $10k total. not out of pocket.

This isn’t a scam, and he has a legit business. My best friend who referred me to him did it and made a lot of money on his first flip with this investor and he had no RE background. I’ve seen the proof + Ive seen inside the business and seen some of his flips. 

but, I’m skeptical my about the funding phase. Ive never been through this process. if I get funded, This will result in a hard pull on my credit (771) but not multiple hard pulls as compared to me going to different banks and doing it on my own. The consultant does it all in one shot. Also, the consultant takes 10% of your fund for their cut. Which, once I flip a house it’ll cover that. But nothing is out of pocket.

ex: 150k ( my funding ) - 15k ( consultants fee ) - 5k (investor fee) = $130k left in funding 

So I have $130k left for a flip. once I flip I use my profits to pay back the LOC 20k + the $5k to the investor then im cleared. now I have the entire line free to use for projects.

I have good credit and don’t want to screw myself. im at A 771 so a hard pull might not affect me but later this year id like to buy my first home via fha and house hack but im going to flip to get some more capital. I did some research, but I haven’t heard any bad things from the people this investor has helped. 

Anyone have experience investing by leveraging lines of credit? any thing I should keep note of? Ive never been through a process like this but seems promising. 

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