!!?Seeking funding advice or getting a construction loan advice!!

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!!?Seeking funding advice or getting a construction loan advice!!

Victor Mena
Austin, TX · Member since 2016 · 17 posts · 4 votes

Hello people of Bigger Pockets! 

Just wanted to get some advice from investors that have been through this before. I'm currently seeking funding for flips or to obtain funding for rental property (preferably out of state rental property or away from Austin. Austin doesn't cash flow to good).  

I do have money to put down to try to obtain a loan through perhaps conventional lending.  I've heard you can get conventional lending with 5% down? Is this true?  I would like to meet these lenders that work with investors and have a talk with them. Who have you guys worked with before where the process went smoothly? I am self employed but my credit score is pretty good. Higher than a 725.  I'm not looking into hard money loans since they are really expensive for flips and will only consider them as a last resort.

I'm open to JV partners looking to invest in the Austin area. ROI is really good in this market where profit are in the six figures! I'm a licensed realtor, structural engineer and have partnered up with an experienced contractor.

Any advice is truly appreciated! Thanks and good luck to everyone!

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Zack Lofton
Hard Money Lender · Austin, TX · Member since 2015 · 97 posts · 36 votes
10y

Have you looking into what your ROI or cash on cash return is for a JV partner vs. hard money loan? I think you'll be surprised when you run the numbers and see how expensive giving up equity is.

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  • Zack Lofton
    Hard Money Lender · Austin, TX · Member since 2015 · 97 posts · 36 votes
    10y

    Have you looking into what your ROI or cash on cash return is for a JV partner vs. hard money loan? I think you'll be surprised when you run the numbers and see how expensive giving up equity is.

    1Reply
  • John Blackman
    Developer · Austin, TX · Member since 2010 · 371 posts · 284 votes
    10y

    This is a pretty open ended request.  There are so many avenues.  Here are a few scenarios I might suggest.

    1) Equity Partner - JV with someone to reach the equity requirements you need for conventional financing. Equity is expensive. This will end up reducing the yield on your time by giving away equity. So be careful. Time is precious.

    2) Conventional Financing - These are hard to get on flips unless you already own the building outright.  If you are going into acquiring a property with a loan contingency that is going to make you an unattractive buyer in the Austin market, maybe not so much in other markets.  This is assuming you are buying a distressed property where the seller may have several other options.  Most distressed or infill land purchases in Austin are going to need to be cash and you can finance the rehab or construction.

    3) Unconventional Financing - This is hard money, but you don't want to consider this.  Even though the rates sound high, this can be a good option if you can get your project done quickly.  Better make sure your contractor can perform.

    ... This is not an Exhaustive List ...

    In the Austin market I have only purchased property with equity and then I finance out the flip or construction costs.  I use hard money to fill short term (1-3 months) gaps if I have to.  There is no quick answer to this.  Ultimately you need to build relationships and try some people out.  You won't know until you've done a few deals.  There are plenty of hard money shops in Austin and even more potential equity partners.  I met all of mine through networking and meet ups.  After you have a few that you work well with, you may find yourself doing less networking since you are busier doing the actual deals.

    Good luck.

    1Reply
  • Allison Lopez
    Interior Designer and Home stager · Austin, TX · Member since 2016 · 40 posts · 14 votes
    10y

    @Victor Mena If you have questions about Hard Money in Austin, I can assist you with that. John is right, hard money can work well and in your favor with the right deal and the right people.  Let me know if you have an questions. :) 

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  • Donald Stone
    Lender · Tampa, FL · Member since 2014 · 206 posts · 4 votes
    10y

    Victor if you are still lo9oking for construction lenders I can help.  Reach out to me and lets discuss.

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