Raising capital for buy and hold

7 Replies

I am new to the game and would like to get in to long term buy and hold properties to hopefully gain some decent cash flow. My biggest constraint as I am sure with most new investors is capital. It seems like with the fix and flip mentality investors would be more willing to throw money there due to the (hopefully) quick turn around. With buy and hold that does not seem to be the case. It seems to be until you have a couple (10+) houses under your control and then pulling equity off of them it is hard to raise large capital in order to pursue more properties. Are there any good blogs y'all have come across or just any advice you could give to the matter. Thanks

Chris

I am curious about this as well.  I am going the traditional route for now and sticking with conventional loans and my own cash to buy and hold rentals.  3 up and running and negotiating for 4 duplexes where I will have to go to b bank for the more traditional 20 year amm, 5 year term loan.  At what point does someone consider going the private capital route via qualified investors only...whatever all those rules are and even crowd funding?

A fair amount of our partners/clients purchase a buy and hold property that needs rehab with cash.  Then we fix it up and rent it out.  As soon as it is rented they refinance it and get their cash back and do another one.  Of course, this only works if you have the cash at first and know a lender who will do a refi with no seasoning.  

Thanks @John Skaggs  for that idea. Is it typically that easy to get a refinance when you've held the property for <1year? Or is that what your saying when you said finding a lender that will do refi with no seasoning?

Yes, you will have to find a lender who will do a refi that quickly.  

Alot of lenders will refinance immediately, but only for the purchase price of the house, not the appraised value after rehab.  Usually, lenders will want 6 to 12 months of seasoning to cash out refinance for the appraised value

@Darren Budahn  What if there is a previous appraisal on a home lets say $100k but you are able to get the home for $75k, can you refi on the $100k or would it be off the $75k??

Originally posted by @Chris Shipman :

@Darren Budahn  What if there is a previous appraisal on a home lets say $100k but you are able to get the home for $75k, can you refi on the $100k or would it be off the $75k??

In that scenario it'd be off the $75k purchase price.

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