Looking for advise on finding creative financing
Hi All,
I live and invest in the Youngstown, Ohio region. I am a father of 2 beautiful little girls and although my wife and I have carriers outside of investing we have a goal of eventually retiring on passive income. I have encountered some challenges with traditional bank funding but am eager to move forward with my house flipping business so I'm in need of some advise. A little about myself, I bought my first foreclosure in 2006 at the peek of the market for $58k with $5k down. It was a 3/2 Ranch near the local school. I asked a fraternity brother for help as his mother owned a real estate agency in our area but today I realize that I might have paid a little too much. I rehabbed the property for about 5k and moved in for two years. I then moved for my job to Pittsburgh PA and my mother and father moved into the property. They paid the mortgage but we decided to keep the house my name. Fast forward 8 years, my father passed away, mother moved in with my sister, and I was faced with a second rehab to get it sold. I invested another 7k and was able to sell it on my own for $69k as a 4/2 ( converting a bonus room off the kitchen to a 4th bedroom). If you add in total rehab and holding costs I basically broke even, which I didn't think was too bad! I forgot to mention that I did most of the rehab myself. I had to leverage a few friends to help with drywall finishing, electric, and painting. I purchased another HUD foreclosure in 2012 for $80k, a 4/2.5, and invested $20k in rehab, again done mostly by me, and today I still live in the home. Last year I had a bank appraisal done and it came back at $180k! Last year we also started an LLC and bought our first rental, a 4/2 slab home for $30k. We invested $14k in rehab, this one I contracted the entire rehab out, and were able to get it rented for $750/ month. We only hold a small loc on the property today and are reinvesting the money into the business. Today I am looking to starting building more funding for my rental business through flipping houses and I have put in place a great team to do the rehab and find the deals but I am finding it challenging to get bank funding. Our debt to income ratio is around 60% due to large school loans and some credit cards so traditional bank financing is becoming a challenge. I can wait until we pay things down but I know that with the deals I've been finding that could happen quickly in a few flips. Any advise you could share or direction you can provide would be very helpful. Thanks!
John