Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes
I reached out to a lender and I was told I had to have capital of my own. I thought you didn’t have to have capital? He told me any lender is going to require me to have capital. He basically told me to save up some money and try again. It could take me a few years to save up that kind of money.
How the heck am I supposed to get started with no capital. People make it sound like people just hand over money to help with funding a deal but I’m just not finding that to be true.
Anyone have some real advice on this? Or am I just not looking in the right place for funding?
Help me get creative!
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
8y
You hit the nail on the head. Find the property, manage the rehab, deal with any and all headaches that will definitely arise. Be on site, make sure it goes smoothly, sign for everything. You will earn your 50%, and sometimes you should earn more depending on the project.
Time is the most valuable thing to most people who have money. Your value is giving them a return on their money without taking up their time.
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
8y
@Branden Sewell
MSA stands for metropolitan statistal area. So if you are willing to go outside the southeast corner of orlando into outlying areas then you could find a duplex that you can get into for ~200,000.
Also and don’t quote me but I believe you can use a portion of the expected income from renting out the other units as a qualifying factor for your property.
Great advice! Thanks for that feedback. I guess part of the process is learning the questions to ask and who to ask. Where do I find a loan officer who can answer my questions?
When you say find out if they will consider rental income; are you suggesting that they would take into consideration the income we would have if we lived in a duplex and rented out one side? Would they figure that income out by looking at Comps and what we would be able to charge for rent? I guess if we got a good enough deal we could prove the additional cash flow as income.
Let me know if I am following what you are saying.
Thanks again!
You need a good mortgage broker to help you with your questions. They're good ones.
Investor · Wellington, KS · Member since 2016 · 256 posts · 188 votes
8y
I would think a licensed contractor with a crew would be very valuable to an investor for remodel/rehab and handling the maintenance. Then give the investor an exit strategy with a buyout agreement
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
8y
Find the REIA near you (no fees to join here), and ask everybody you talk to who they use for financing their deals. Quicker than calling all the local banks and credit unions. But, you could do that as well. Smaller banks and credit unions more likely to work with you and your situation, with their in house loans.
I'm not sure I understand what you are suggesting. How would I make more money from that other than from the services I offer? I mean I want to make more money than that. Would that really accomplish my goal? That would just get me another client and another pay check. Or are you suggesting that there could be more in it for me by bringing my services to the table?
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
8y
Dude I wish I had you here in Houston, and not just because we share the same last name. I could put you to work, man -- not that you wouldn't find enough work on your own. Contractors were living pretty large around here, as you might have heard.
Seriously, the whole 'you can flip houses with no cash' is technically true, but only theoretically. You could also run into bigfoot in the woods and play checkers with him, while sharing a nice bag of beef jerky. It is possible, but …. unlikely. You'll need at least some reserves.
What you want to find are hard money lenders, and/or private money lenders. Go to some meetups and chances are they will be there, and maybe even sponsoring them.
While you are doing that, go find some good flippers and see if you can get in with them. Maybe in addition to painting services you could run some jobs for them. A lot of folks here on BP have full-time jobs and they cannot be running back and forth to buy supplies and chase contractors. That would be SO SUPER valuable, man, to learn the numbers before jumping in. In fact, it is probably a huge blessing that you don't have the cash right now. Save it, and find some partners that are doing what you want to be doing. Then figure out what you can do for them. Then the money will find you.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
8y
Check out the Florida LL association networking at mine in Wa I have found to be invaluable. Looks like you are a contractor? Those skills should be in great demand and attractive for partnering.
Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
8y
if your problem is capital and not your DTI. there's really two ways to go about this.
1. simply save. qualifying for a 200k place means you have probably 9-11k saved up for a place including closing costs. so just increase that by 50% and whoop theres a 300k place for you. with some strong saving, you could probably do that in 6-12 months.
2. use gift money from friends and family. you can take these gifts for personal residences.
After all the amazing information on this forum post I think my problem is bad information not necessarily the income or savings. I was told I couldn't do certain things that I am finding now to be untrue. I just need to make the right connections and ask the right people the right questions. I have been asking the WRONG people the right questions which has gotten me bad information. I truly appreciate everyones feedback on this post. I have already learned so much.
Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes
8y
@Mark Sewell Yes, I have to agree. Great last name. haha. I have a cousin named Mark Sewell. Cool stuff. It would be nice to have you here in FL as well. Seems like you have a great way of communicating with people and making them see their value. That goes a long way. I love helping people find their value and their potential.
Honestly, my business pays the bills and it is my full-time job but I want to get into Real Estate Investing to build some passive income and not have to worry so much about slow seasons, or working until I'm 60.
My business is doing pretty well for doing primarily painting. We have had a pretty successful 1st year and I'm sure next year will only be better. We are just now starting to see referral business and word of mouth business come in. I know that is going to take some time since we are so new to this area.
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
8y
Originally posted by :
I just need to make the right connections and ask the right people the right questions. I have been asking the WRONG people the right questions which has gotten me bad information. I truly appreciate everyones feedback on this post. I have already learned so much.
Part of the process, I guess.
Also do some networking with people here on BP in your area. You'll find some amazing people doing cool things in Orlando, I am certain.
Peachtree City, GA · Member since 2016 · 41 posts · 17 votes
8y
@Branden Sewell Be sure you are keep tight records on your business, so you can go to the bank with sharp financials in hand any try your best to put some money in savings to show the bankers. FHA is your best bet to get that house hack. Look at BiggerPockets.com/events and listen to the BiggerPockets podcasts they will help keep that drive alive.
Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes
8y
@Kenneth Blacow I keep very good financial records for my business. However, I am not sure I can use my businesses financials for a personal investment, or an investment with a separate LLC. If I can I just dont know about it, or how. I thought they would only look at my personal financials.
I binge listen to BiggerPockets while I am driving for work. I drive a lot. I put 14K miles on my truck in about 4 months. Thats a lot of time listening to BiggerPockets. It definitely keeps the spark alive. I love listening and learning. I am even reading some of their books too.
My goal is to do my first deal by the end of the year!
Real Estate Agent · Orlando, FL · Member since 2014 · 231 posts · 130 votes
8y
@Branden Sewell If you need a recommendation for a loan officer, shoot me a PM. I have gone thru a couple bad ones in my time and now work with some great ones. Seriously I had clients cancel a deal because of the loan officer I was using when I first started my career.
Peachtree City, GA · Member since 2016 · 41 posts · 17 votes
8y
@Branden Sewell I was thinking if you want to use your Self-Employement income you will need to show how much you have generated over the last two years. Hey admittedly I’m new to learning this whole financing thing also. The books I am listening to right now are the Rich Dad author Garret Sutton all his books are great about REI.
Keep it up I’m doing the same.
Lender · Fort Lauderdale, FL · Member since 2018 · 22 posts · 15 votes
8y
@Branden Sewell You absolutely can fund a duplex house hack today. Will you turn a huge profit is the question? First, I would go to a hard money lender. HMLs lend based on the property value first. Being new, you can get 70% LTV. That would cover $140k of your $200k. Get a personal line of credit for the remainder and to start rehabbing the property.
Is the HML and PLOC going to eat into your profit margins? Yes. Will you have to wait 2 years to get started in real estate investing? No. Besides, using other people's money is always the best approach. PM me for more. I do this everyday for motivated real estate investors.
Not to be Debbie Downer on the FHA approach, because 203k is a great loan product....but when a duplex has competing bids, the FHA offer will be pushed aside. Why? FHA loans have exact qualifications and are more often scuttled at closings than other loan products or cash offers. On the other hand, cash offers take precedence in the mind's of a seller. That is what I am proposing, making a cash offer.
If I still have not convinced you, at the very least do not use FHA, use Fannie or Freddie's competing loan products. Freddie Mac's Home Possible mortgages can get you 15% down, but then add in down payment assistance programs and you can achieve 0% down payment...here is the real advantage over FHA, PMI disappears with Fannie and Freddie after 20% of the loan is surpassed. FHA maintains PMI throughout the life of the loan. That adds up to a huge savings.
Yes, you can get involved in real estate investing with nothing down.
Specialist · Little Rock, AR · Member since 2018 · 148 posts · 71 votes
8y
@Branden Sewell I highly suggest you read some books on real estate. No offense, but I fear you will make many BIG mistakes because of lack of educating yourself. Go to biggerpockets.com/books and pick any of those books, especially the book on rentals by Brandon Turner. These can be extremely valuable. Then as you progress you can use bigger pockets to bounce questions off of what the books don't answer for you. I am a beginner investor myself, but I have been reading many books, averaging about 1 book per week. The more you educate yourself, the more confident you will be. Trust me, all of this was soooo foreign to me at first, but after doing my own research and asking questions on bigger pockets I am very confident in my direction, numbers, market, and how I plan on executing my plan.