Updated almost 11 years ago on . Most recent reply
Ideas for capital & financing
Hello BP,
I am hoping to get some ideas from the community here. I am relatively new to BP and the real estate investing arena so I thought I would lean on the vast knowledge and experience on the site. I just started reading Brandon Turner's "Investing in Real Estate with No (and low) Money Down" but haven't gotten through it yet.
I am in the process of building my team and have started to analyze potential properties for my first purchase. I am looking at single family, townhome, or a small multi-unit to begin with. As I work through this process, I begin to get "anxious" about that fact that I have very little cash to leverage in case I find a potential deal. I will read the book further to see what my options are, but the closer I get, the more I would like to have some type of financing option available.
Here is some info: I have a great credit score (+750). I currently own my own home and refinanced to a lower rate. I have about 20% equity in the house. I have a sizeable 401k that I have an opportunity to pull $ from, however, I can only have 1 loan and took an ill-advised loan last year that I would have to pay off first to do so. At this point, as an employee, I have a little cash flow to work with each month as I pay down other "bad" debt that I have. My DTI is ~30%.
Initial thoughts: work to get a personal loan to pay off debt to 401k loan, student loan & credit cards. I am not paying interest on credit card debt right now. Once I "consolidate" I will have that monthly payment, then I could leverage at least $30k from a 401k to have 10 - 20% down & "fixing" up money. Aside from this route, I could just contact some mortgage brokers or lenders to see what I am approved for as it stands.
I realize I could try to finance through a seller, or other options (as I read the book), but I am hoping to get your thoughts on the approach. It seems like a good idea to have some level of confidence that I can get financing for my first deal as I look for potential properties.
Thanks for all the feedback in advance!