Best Lending/Financing Options for New Investor

Dayton, Ohio
Creative Real Estate Financing
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Best Lending/Financing Options for New Investor

TJ Fries
Member since 2023 · 27 posts · 8 votes

Hello everyone! I'm a new investor, haven't purchased a property yet, nor do I have a lot of funds to contribute to the deal.  What is everyone's opinion on the best lending/financing options for someone with my experience, or lack thereof? I've looked at hard money, but the down payment is always an issue.  I've toyed around with the idea of a getting a hard money loan, and using a 0% interest credit card cover the rest.  Any ideas? Thoughts? Input? 

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y

save up enough for a down payment and house hack

do not start with hard money

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    save up enough for a down payment and house hack

    do not start with hard money

    3Reply
  • Ryan Davies
    Investor · Salt Lake City, UT · Member since 2019 · 339 posts · 126 votes
    2y

    Heres how most hard money works:

    • • Rates: 10% to 14% (Most Deals are 12%)
    • Terms: 1 Day - 24 Months (Most Deals are 6 months)
    • Fees: 3-5 points(%) of loan amount (Most Deals are 3 points(%)) - $2500 minimum fee
    • Minimum Loan Amount: $75,000
    • Max Loan: 65-70% of After Repair Value(ARV)
    • 100% Rehab Financing Available (Most Deals require 10-20% of purchase price down or cross-collateral)
    • Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 7-10 business days)
    • NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.
    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @TJ Fries:

    Hello everyone! I'm a new investor, haven't purchased a property yet, nor do I have a lot of funds to contribute to the deal.  What is everyone's opinion on the best lending/financing options for someone with my experience, or lack thereof? I've looked at hard money, but the down payment is always an issue.  I've toyed around with the idea of a getting a hard money loan, and using a 0% interest credit card cover the rest.  Any ideas? Thoughts? Input? 


    Save up for the downpayment or get some partners involved. Do not over leverage yourself. It will cost you more in the long run. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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    1Reply
  • Paul Klei
    Investor · TX · Member since 2023 · 57 posts · 5 votes
    2y
    Quote from @Ryan Davies:

    Heres how most hard money works:

    • • Rates: 10% to 14% (Most Deals are 12%)
    • Terms: 1 Day - 24 Months (Most Deals are 6 months)
    • Fees: 3-5 points(%) of loan amount (Most Deals are 3 points(%)) - $2500 minimum fee
    • Minimum Loan Amount: $75,000
    • Max Loan: 65-70% of After Repair Value(ARV)
    • 100% Rehab Financing Available (Most Deals require 10-20% of purchase price down or cross-collateral)
    • Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 7-10 business days)
    • NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.

    I've spoken to a few lenders who confirmed that as long as the purchase price is below their LTV threshold the purchase would be 100% funded. That's the structure I'm looking for. Any experience with that?

    0Reply
  • Sarah DowneyPro Member
    Lender · Springfield MO · Member since 2023 · 56 posts · 63 votes
    2y

    I would recommend getting involved with a local REIA group and learn from others that have been doing this for a while in your local market.

    I think it is important to have wisdom from other before diving in. 

    Also, I would avoid using credit cards as much as possible. As you are beginning this could put you in a tight spot and if you damage your credit it will make financing hard in the future.

    I have just seen a lot of people over leverage themselves and get into trouble. 

    [email protected]417-986-2027
    2Reply
  • Greg Downey
    Lender · Springfield, MO · Member since 2015 · 379 posts · 180 votes
    2y
    Quote from @Paul Klei:
    Quote from @Ryan Davies:

    Heres how most hard money works:

    • • Rates: 10% to 14% (Most Deals are 12%)
    • Terms: 1 Day - 24 Months (Most Deals are 6 months)
    • Fees: 3-5 points(%) of loan amount (Most Deals are 3 points(%)) - $2500 minimum fee
    • Minimum Loan Amount: $75,000
    • Max Loan: 65-70% of After Repair Value(ARV)
    • 100% Rehab Financing Available (Most Deals require 10-20% of purchase price down or cross-collateral)
    • Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 7-10 business days)
    • NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.

    I've spoken to a few lenders who confirmed that as long as the purchase price is below their LTV threshold the purchase would be 100% funded. That's the structure I'm looking for. Any experience with that?


     I've got a couple of programs that will do that on our platform. You'll need to have a bit of experience AND those deals aren't for people with NO money. It's just so that you don't have to put money into the deal. 

    0Reply
  • Paul Klei
    Investor · TX · Member since 2023 · 57 posts · 5 votes
    2y
    Quote from @Greg Downey:
    Quote from @Paul Klei:
    Quote from @Ryan Davies:

    Heres how most hard money works:

    • • Rates: 10% to 14% (Most Deals are 12%)
    • Terms: 1 Day - 24 Months (Most Deals are 6 months)
    • Fees: 3-5 points(%) of loan amount (Most Deals are 3 points(%)) - $2500 minimum fee
    • Minimum Loan Amount: $75,000
    • Max Loan: 65-70% of After Repair Value(ARV)
    • 100% Rehab Financing Available (Most Deals require 10-20% of purchase price down or cross-collateral)
    • Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 7-10 business days)
    • NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.

    I've spoken to a few lenders who confirmed that as long as the purchase price is below their LTV threshold the purchase would be 100% funded. That's the structure I'm looking for. Any experience with that?


     I've got a couple of programs that will do that on our platform. You'll need to have a bit of experience AND those deals aren't for people with NO money. It's just so that you don't have to put money into the deal. 


     Please message me and tell me more about these programs. Would I only need to list my assets? Assuming so, would that get me to 100% financing? 

    0Reply
  • Greg Downey
    Lender · Springfield, MO · Member since 2015 · 379 posts · 180 votes
    2y

    @Paul Klei, I'll drop you a DM shortly but wanted to reply to the forum as well. The couple of programs that we have that do 100% LTC are not just. "I have a good deal, give me money with no questions asked". I'm not saying you are saying this BUT it is worth bringing this up based on" I just need to xxxxxxx to qualify". 

    The main qualification is that you have real rehab experience. Generally, you'll need 5+ experience in the last 3 years. That can be expanded if there is legitimate experience beyond 3 years BUT this is the main inclusion/exclusion criteria for all of the 100% programs as the lender is taking on a massive amount of risk. They want to know that the borrower has a history of executing. 

    0Reply
  • Gustavo Delgado
    Houston, TX · Member since 2015 · 261 posts · 170 votes
    2y

    go to your local meetup and get to know people. you do it by showing up everytime they have the meetup. You may find someone at the same stage or just ahead on the journey you are on. No money or experience, I would look for a mentor/partner.

    1Reply
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