How to finance?

Question

There is another question that interested me a lot: how do seasoned investors fund the deals? 
I mean, you can keep taking mortgages, but that would dry out pretty soon, after 5 or 6 purchases.  Many of the folks here have 30+ properties under the belt and keep buying. How that is possible? I don’t believe they buy “all cash”, no one does that. Seller financing? If you buy properties at bottom price seller financing doesn’t sound viable.
What else?
Alex

Curt Davis · Answer

The company I work for we have what is called the Fannie Mae Plus Program for investors who can not buy property this is a loan product that does not go on your credit report. There is no other program like this out there. It is currently available in Memphis TN and Charlotte NC. Properties have to be purchased from us, this is the only catch.

Jon Holdman · Answer

Well, its back to 10 at this point.

Jeff Fairchild · Answer

10 mortgage limit?  I thought it was 4.

You guys need to learn how to use private money.

Michael Rogers · Answer

LW1172 said:

I do most of my banking in Cleveland, TN.  The two banks I used are pretty small.  One has maybe 4 branches and they are all located in Cleveland.  The other is located in Knoxville and Cleveland.

They are called:
1.  Southern Heritage Bank
2.  First National Bank

It has been my experience that the smaller banks seem to be more flexible in their lending.  Particularly once a relationship is established with one of their senior lending officers.

Lisa Weathers · Answer

Excellent question...I was wondering the same thing. I currently have 11 mortgages and am running into the problem with the usual 10 mortgage limit with most banks/mortgage companies. 423Chandler, what local bank do you use?

Michael Rogers · Answer

The easiest way I have found money for buying properties has been with my local bank.  I have found that local banks are much more flexible than larger regional banks with loan terms.  I have had the same loan officer for the last 8 years.  He does not have any limit to the number of mortgages he is willing to underwrite as long as the LTV (Loan to Value) is 85% or less.  On top of the 85% mortgages, I sometimes use a line of credit to help cover part of the down payments.

The best advice I can give is to form a trusting relationship with a good local banker.  Always be straightforward and honest with them and as you grow and demonstrate competence, they will be happy to lend you money.

Alex Potec · Answer

Thank you, 4rmgt. 
The tool I need to use is one between my ears. 
Hmm, let me see… Must be my baseball hat. How can I use it to get money?  Panhandling!!?
:lol: 
Seriously speaking, I see what you talking about. There is a variety of options, and you use whatever works better or whatever you more comfortable with.
Still… If you buy a REO or Short Sale, you can’t use Subject to or be Seller financed… Or can you?

Account Closed · Answer

Well REO is the lender, so they are the seller, so technically you can buy seller financed.

When I negotiate short sales, sometimes I ask they lender if they will put a new loan in place to take an unperforming asset and make it a performing one. This does not always work, but what is the worst they can say, "NO".

I also have private lenders that I use. Depending on the project, Hard Money is a possibility.

Sometimes I have credit and/or equity partners in place.
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Think of it this way, a contractor wears a toolbelt because just to do some basic stuff he needs a certain number of tools. Standard and phillips screwdrivers, hammer, tape measure, utility knife, wire cutters, needle nose, vice grips, pliers, an adjustable box wrench, etc.. You get the point.

You need to be able to have the standard tools available. Not saying you need to have a wet tile cutter, drywall taper, etc all the time, but the basics. Get the knowledge on the basic tools and you will amaze yourself!

Account Closed · Answer

If you just stop and think I am sure you can figure that one out.

1. Business Lines of Credit
2. Seller Financing
3. Bring in Credit Partners
4. Subject To deals

etc.

See how that works. The most valuable tool any of us have is the one between our ears. We need to learn how to let it think for itself and not stifle it.

WHen you do that, trust me on this, you will see solutions to just about any road block.