Hard Money Lenders/Personal Investors In Nj

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Hi! 1st Time posting on BP. I have been looking at properties for a while now, Came up with Business plans, Breakdowns, Etc. I have basically been nervous to get into it since i have my own home, Comfy job, And a wife but after reading a lot of other peoples stories I think it is time to Jump into it and really start looking into finding an investor. Anyone recommend where to start to even start looking for investors? IDEALLY I would love to find an investor who basically has been doing this and wants skin in the game but does not want to deal with the head aches of the construction or management side. Basically just have a steady cash flow with a good ROI. I know that will be hard to find though so anyone recommend where to start looking or suggest a good HML or Investors in New Jersey?

Thanks! 

Hello @Michael Fasano and congrats on the 1st post! 

Best place to look for investors are your local meetups, ask around, usually the more experienced players don't show up too often. But if you keep networking, asking the right questions, you will find someone who you can learn from. 

Also follow recent sales of properties are are flipped, or rental properties you like. Look up the owners information, and write a letter or call. I like calling and offering to take them out to coffee. (Lunch is tough I've found, hard to have a conversation while eating and coffee is more informal for a 1st meeting). 

You can partner, but you must bring value. Capital, time, project management, find the deal, etc. Typically for this, shoot for a 50/50 split. You must look at it as what your getting in return (Knowledge + Education) as opposed to "giving" something up (50% of the profit). 

When It comes to HML, there are a bunch out there now. Go with a good brand, that someone can recommend to you. The biggest barrier you will face is experience. Typically they like to see 3 deals in the last two year on your tax return. You can bypass this by 1) Bringing someone on your team that has it or 2) knowing a good lender or broker that can "endorse" you.

But here are the current rates and my favorite product so you can underwrite your deals: 

HML is growing in market share, which has compressed the rates over the last year or two. The lowest I've seen from a good lender is 8.99% for a 1 year IO term. But that is for someone who does volume and has a good track record. (At times only putting 5% down in each deal, under a certain ARV)

But for a new investor I would use these numbers, and if you get something cheaper, then great. 12% and 2-3 points is pretty standard for someone that hasn't built a track record, yet. They will loan 80-85% of the purchase price, 100% of the rehab, up to 65-75% of the ARV. Draws for the rehab are taken out as the project continues to be finished with the first one dispersed at closing so you can start the project.

If you do it right (BRRRR) then you can pull all your capital back out, have your renter cover the HML costs, and possibly pull some tax free cash out.

HML are great but also on the top range of costs. Private lenders are better (IMO) because they offer more flexibility. For instance, last deal I paid one of my private lenders 10% on the project, no points. (Just so you can compare costs). @Matt Faircloth just wrote an amazing book on Raising Private Capital. I definitely recommend it! 

Again, congrats on the 1st post and welcome to the best place for investors!