Bergen county NJ financing my own flip using LIC?

Question

I have spent the past 8 Months dedicated to REI Netwoking and education.  I am from Bergen county NJ and looking to start my investing here in a B market with a flip.  My business plan is to do a couple flips within the towns around me (active area, 70% LTV deals are not easy to come by but hey are here) and once I am more comfortable and experienced enter the C market Brrrrr strategy aggressively to acquire 200 rental units over 10 years.

I have great credit, income, and own my home with 200k equity.  I am looking for advice based on this info on whether it is best to take out a LOC to finance my first one or two projects myself, refi my primary, use conventional or other?  There is a possibility 50/50 JV but private lender is dragging his feet on POF's.  ( he would fund 100% with no other involvement)

By the way I also have a very good team around me with my wife being an accountant, 3 very good friends who are real estate appraiser of 17 years, a Plumber and electrician who own their businesses for 20+ years each, and 2 good aggressive REA's

As you can tell, I have options.  I am just looking any extra advice I can get before pulling the trigger!  Thank you in advance for you help.

Johnathan Boyle · Answer

@Jason Guinard if he's having troubles showing POF, one of two things, his assets are not liquid to fund deals easily and that could be an issue that he is just saying he will fund it for whatever reason or 2) he just doesn't want to show it which is fine because you can always get off market deals UC without having to show a pof. If you are looking on market, I would reach out to some HML for POF letters. Some give them fairly easily and then when you are buying, just use your lender and have the HML as a backup. Hope this helps!

Jason Guinard · Answer

@Johnathan Boyle

Thank you Johnathan I appreciate the advice

Jason Guinard · Answer

@Kerry Boyle Thank you for the advice lol.  I sent you a PM, talk soon.

Johnathan Boyle · Answer

@Jason Guinard First and foremost, if you are replying to someone, you should @ them in the future because I would not have looked back at this thread without someone else mentioning me. It's ok because I did it too lol. Second, as far as local, I have talked with Alpha funding and ABL. However, I have been lucky with Lending Home (they are more nationwide). Also, I understand your concern about them, but honestly they need to fund deals to make money and they will only fund deals that make sense so if they are approved by a hard money lender, then you know you have a deal in your hands. So that is the benefit of working with them.

@Kerry Boyle Thank you lol. I like your name in general as well haha.

Kerry Boyle · Answer

@Jason Guinard lots of good advice from @Johnathan Boyle and @Nghi Le.

I think a good HML will add value like Nghi stated by being the eyes. Reach out to multiple HML's and see who is the best fit. It isn't just a one

Also love the 'Boyle Venture Group' business name John!

Jason Guinard · Answer

Thank you Nghi Le.  Yes I an going to  move froward on the HELOC just to have it in my pocket.  I am also going to get pre approved from the bank for a second mortgage in case I want to make a conventional move.  I have gotten similar advice from others and will look for a couple HML.  You sold me on them being the "eyes of the deal"  Good point!  Thank you again for your knowledge.

Nghi Le · Answer

@Jason Guinard

This is the probably with private lenders.  We have a few, and I'm always a little nervous when it gets close to the deadline.  How do I ensure they won't bail out on me?  If anything, try to get a POF from them first before offering on a property.

If you are doing your first flip, I'd recommend either doing it with a seasoned flipper as a partner, or with a hard money lender (HML).  I'm an active flipper here in my market, and I always use a HML (and have borrowed from a dozen of them).  I see HMLs as my partners. They are another set of eyes on the deal. They check out the area, they confirm my ARV, they vet my contractors, they ensure that everything looks good with title, that I have the proper insurance in place, etc. I have had HMLs make suggestions to the kind of rehab I should do: "I think you might be over-rehabbing in your area; I don't think you should do hardwood there." And if my hard money lender won't lend on the deal, I'd probably reconsider whether it is a deal.

Either way, get a HELOC anyway; it's going to be useful to have in your RE career.  If you can refi your primary with a lower interest rate, and you're still in the early years of your mortgage, that might be a better way to go.  Might be better to consult with a loan officer on that one.  Always make sure to watch your DTI.

Ruel Baliong · Answer

Hey Jason. I'm just starting out in REI as well and still learning. I'm here in Fair Lawn and would be really interested in following your progress being that you probably had the same questions that I have now. I'm not sure why you are hesitant to use a HML. Is it because it will cut into your profits? It seems like there are plenty of options for HML out here, but like you said, they are pricey. But until we develop a solid lenders list, I think we would have to bite the bullet with interests costs. That way you are not risking your own funds. Just my 2 cents.

Jason Guinard · Answer

Thank you Johnathan.  Hopefully he comes through but I am going to go ahead and get pre approved myself just in case I have to go conventional and fund the rehab.  Do you recommend any HML?   I have come across a couple through local REI meetups, but to be honest they make me uncomfortable because I feel like they are praying on newbies.   not trying to help.  It also seems like they don't even want to talk until you have a property under contract.  Sorry about the hour, I work nights.  Thank you again.

Jason Guinard · Answer

I realized typo in title Heloc not LIC

Bergen county NJ financing my own flip using LIC?

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