I’m a novice investor looking to become more active in growing my portfolio. So far, I have one rental and a primary.
My purpose for starting this post is to get some advice on funding my next deal, which will be a flip.
I planned to start a HELOC on my primary and used those funds to get started. However, I realize a HELOC of $33k may not suffice. In addition to the LOC, I also have contributions of over $20k from my pension I can borrow that is automatically withdrawn from my check and paid off within 5 years.
If anyone has some advice and is willing to share, I would greatly appreciate it.
Hey Andre! I am in a similar spot in my portfolio as you.
Without intending to get to personal too quick, do you make good money / have solid debt to income? There are lenders out there that can do investment loans and utilize the cash flow from the property in order to help finance the loan and then you can utilize the cash you do have now as a down payment.
Just a thought, I don't personally know what prices look like near you, I'm in central NJ but I helped someone do a loan like that this year and buy a house.
Hope this helps, best of luck!
If you have a good deal and you know the numbers will work (maybe the 70% rule), finding the financing shouldn't be too hard. I believe similar to what Robert is saying, if you have good credit and a good debt-income ratio, you could use traditional financing (i.e. a bank, mortgage lender) to get a construction loan. These are also known as 203k loans. Some of them only require 3.5%-5% down but I've heard they require a lot of paperwork and you need to find a licensed contractor who has experience with this type of financing.
Otherwise there are definitely private lenders out there who may offer a fix and flip loan. I have come across a lender in the past who offered this type of loan. The only requirements were 10% down, a credit check (620+) and of course they would have an appraisal done to make sure there is the money you think there is in the deal (value of the home now + renovation cost < estimated ARV).
Start talking about real estate in your day to day conversations. You might find a private lender from someone unexpected!
Best of luck!
Yes, I do make a decent salary, and my dti is below average @Robert Webb . Do you mind sharing the information about the loan provider you used? I would greatly appreciate it.
Thanks for your input, @Gregory Fazio . I read about the pros and cons of a construction loan, and as you said, most opinions expressed the hassle with the paperwork. Also, great suggestion about making real estate part of my day to day conversations.
Sending you a DM - don't think im allowed to post contact info in fourms