Why is it so hard to get MONEY????

9 Replies

Hey BP community! Hope all is well. I am in need of some help from anybody who would listen. I need funding for some deals. I found that when I have all the tools that I need in my toolbox and it is time to make my offer funding is the main thing holding me back. I'm the type of person to get everything that I need before I make an offer. This is partly from my structural personality. Researching funding options just discourages me because of the criteria I set for myself. I am in a market where I can purchase SFH between 30k - 50k and make a pretty decent profit. My goal is to purchase property and use the buy/hold methodology. I'm looking to pay little to no money down because funds go right to the wife and kids smh. My credit score and income are good. I'm open to HML, PML, Line of credits, vertically anything to help start my deals. Any insight from individuals that were in my shoes when starting out would be helpful.

If the houses you're looking at are under $50K, I'd look into getting a personal loan, it's very easy and fast if you have great credit.    I use Lending Club to get started, because we were getting houses that wouldn't pass inspection so deals had to be in cash.   Definitely do either a line of credit, or personal loan,  and get some credit cards in the business's name.   Good luck!

@Omosanya 'OJ' Cole first off, you are surely not the first person to experience this. This is part of the struggle. Unfortunately the answer is to work harder. But let's explore how..

1. Review your processes right now. Create a step by step list of what you exactly right now in approaching possible lenders (i.e. 1. ID property 2. Run numbers 3. consider ifnancing options 4. generate report etc etc.) Where does the process fail you? How do you approach a Hard Money or Private Money Lender? Do you have the numbers for them? Proof of your past work? I recommend using the BP caluclators to generate a nice, neat report that you can show HML's & PML's.

2. Educate yourself more. I'm sure you've done your homework as you have gotten this far but keep exploring (i.e. working harder). Have you read all blogs on here? Searched the forums? Listened to the podcasts? Podcast #009 would be great for you to review.

3. It seems as though you have identified goals but perhaps go farther. 5 yr. 10yr. 20 yr. If you are looking to buy and hold with HML's & PML's are you going for the BRRRR strategy? How will they get their money back?

4. If you are looking for a buy and hold, consider a first time home buyer program for your state. Delaware has a great program with little down. You get your own property with little to no money down and you can continue to fund your family.

A lot to review but hope this helped!

Don't be in the flipping game until you have some money saved up. I wouldn't lend 100% to a newbie. You need to do some deals on your own to show a track record before a lender will trust you.

Thank you Linda D. - I do think a personal loan would be a great alternative but my term would not be desirable for me until I refinance. I currently do not have an incorporated business or a business name as well. Currently plan on doing everything through my name until I get a couple properties under my belt. Would you recommend me having an official business in order to open personal loans and line of credits?

Thank you @Alexander Zurn for the information and your insight. The questions you proposed are thinks that I have not asked myself. I think I would need to do more research and determine a route I need to do with my current situation. Unfortunately I would not be approved for a lot of the first time home buyer programs because I currently own a home that me and my family currently live in. Was thinking of refinancing my home but the current rates are higher that my current mortgage rate. I haven't reviewed Podcast #9 but I will now :).

Thanks @Robert Shaw for taking the time to respond to my post. I would need to build a consistent track record.

@Omosanya 'OJ' Cole,

My best advice for anyone getting into real estate, especially doing fixer uppers, get a good partner.. determine your weaknesses, and find someone where that's their strengths.    It might be that your best option is a silent partner that funds it?  My partner (okay, i'm bias b/c he's my husband) knows all the constructions, building, woodworking, the fixing up logistical stuff, and I'm the finance  and design.. you will be 100x happier and more successful if you find a partner that's a ying/yang... a partner and a mentor to match your strategy!  

An LLC will make it easier for taxes, liabilities, etc.. definitely getting one.

My last piece of advice.. especially if you're doing fixer uppers.. expect 90% of the things to go wrong, life happens, you need to have the financial backing to pay for stuff... if not, you'll just be another statistic. I can't stress this enough.. you need to have all your finances ready, and your LOC available too.. Good luck!

I would talk to property managers at local brokerage firms.  Let them know that you are looking to buy a package deal of 3 or more properties from landlords who want to retire.  Run ads on FB and Craigslist stating that you buy turn-key rentals.  Buying in a package in one transaction saves the seller money and helps them cash out quickly. It is easier to get a commercial loan for several properties than a personal loan for $50K.  It's like buying a multi-family, but they would appraise all of the properties individually. You will need 25% down, but this adds to your portfolio very quickly.

@Omosanya 'OJ' Cole I would HIGHLY recommend dropping the attitude you need all the tools to make an offer.  Between flips, close and list as-is, and hard-money loans I've done plenty of deals, and I wouldn't say I ever have "all the tools I need" when making an offer.  I always contact mentors with more experience (to resolve complex issues that inevitably arise).  One could argue each deal is a learning experience and to require every issue addressed before entering the contract is an extremely limiting mindset.  One could argue you don't even know what tools you need until you walk through with GC and contact a person with more experience than yourself.

Brings me to my next point: find a partner who has funding and experience. Bring them and pitch them on your deal. You might only make 10% for advanced bird-dogging, but certainly I've done several deals with individuals just getting started that bring me the deal, and I bring the cash and rehab experience. I offer around 10-25% if you bring the deal and nothing else, but you can't reasonably expect 50% if you're not bringing money or management to the deal. Go to your REIA and it won't be hard to find someone to work with IF you bring the hot deal.

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