Newbie to real estate but not construction...

Newbie to real estate but not construction...

Contractor · Farmington, CT · Member since 2019 · 8 posts · 0 votes

A brief synopsis about myself, and my current business... I am 32 years old and one of two partners in a (mostly) residential building amd remodeling company that is in its 4th/5th year into its life. We have been succesful with residential and light commercial contracting, whether it be full homes/additions or general interior/exterior remodels (Ie. Kitchens, bathrooms, etc.). I have been in the field (construction/building) for almost 14 years npw and havr been contemplating jumping in to real estate.

My business partner Shawn, is a classically educated guy, also in his early 30's. He went to college for business management, and is also a realtor. We feel we have the perfect network and team in place to make the transition into real estate investment. Specifically starting with flipping, and then rolling it into buy and hold and/or multi-family properties.

Our biggest hurdle now, is capital/financing. We have the right team of people in place. A contractor (us), a realtor (also us), and a real estate attorney (Shawn's fiance is an attorney that works at a full spectrum firm, and he also has contacts from his 10 years as a realtor). We have a business plan, that includes a mission statement, basic guidelines/criteria and multiple exit strategies. Our only problem is pulling conventional loans via our business as it doesn't have a structured income stream. That is... we dont make the same amount every week or month or year. The other side is that hard money lenders from what I can tell, have the prerequisite of "have you flipped a property before now?" Obviously that answer is no, we have not.

So basically I am here in an effort to find some more ideas on creative financing, and how I can put the money we currently have saved (around 30-40k) to work for us, in an effort to get into the market. All comments and questions are welcomed! Thanks in advance!

Side note, I posted this in a few other places on the app too. Sorry if that is a no-no

-Jay from J and S construction llc

0Reply
4 views

5 Replies

Jump to latestLatest
  • Los Angeles, CA · Member since 2018 · 14 posts · 13 votes
    7y

    Hi Jay,

    Congrats on your current business. For financing there is a list of hard money lenders on this site you can reference. If you have a deal and you want to finance you can go that route. See link below:

    https://www.biggerpockets.com/companies/hard-money

    In addition, you can start going to REI meetups in your area - there are some posted on this site you can look for NETWORK > Events tab. Besides meeting potential private investors that may be able to handle the funding side of things, its likely a good opportunity to network and get further exposure for your construction business.

  • Ypsilanti, MI · Member since 2018 · 189 posts · 127 votes
    7y

    @Jay Lipshez I also second the Hard Money approach. Depending on your region, and the cost of entry, $40k is plenty to get you off the ground on your first. That's right around what I had for my first, and I'm on track to complete my first BRRRR having funded the rest with HM. Will end up with 100% of that back after refinancing, ready for deal #2!

  • Contractor · Farmington, CT · Member since 2019 · 8 posts · 0 votes
    7y

    matt, were you doing a flip or a rental property? We see a flip as ideal because we dont want to tie up all that money, and we dont have an easy refi route, as there are 2 of us. We really want a flip. Do you think HM is still possible with abput 35k, on a property listed around 100k, with an ARV of around 170k with about 30k of work required? We were hoping to finance 100% of the property then cover all the rehab costs with out own cash. Thanks for responding. More helpful than you know to talk to others in this position!

  • Contractor · Farmington, CT · Member since 2019 · 8 posts · 0 votes
    7y

    @Brian Bellanca

    Is it possible to set up something with a HML before you find the EXACT property? That way, id be ready to pull thr trigger in an industry where time is such a precious asset. My area is very competitive with reis. I will sign up for some rei groups though. I like that idea. Thanks so much for the input!

  • Los Angeles, CA · Member since 2018 · 14 posts · 13 votes
    7y

    @Jay Lipshez no, they lend on a deal by deal basis and actually take a good look at the numbers to make sure it's not a crapshoot with their money. If you get to know some local private lenders and bring them into a few deals that turn out well you might be able to arrange something like that. Other than that there's the possibility of taking out a home equity line of credit to help fund the deals - since it's you and a partner maybe you could both do that to start out if you are not comfortable with HML to start.

    It might be worth talking to a few local credit unions to see if they have any offerings. If your business has been around for a while they might extend a line of credit but being in the construction industry my experience has been banks are very wary of lending to contractors after the last downturn.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.