Hello, I am doing a rehab very soon in Fords NJ. My partners and I have the property under contract now for $175,000. The estimated renovation budget is $60,000. My partner is obtaining a mortgage for the property, as well as a renovation/construction loan. We Just needs funds to fund the first 1/3 of the renovation costs because the bank will release the first installment only after the first 1/3 is finished. I am looking to raise $25,000 with an open 12 month term. I am willing to pay 12% rate of return. So this is what I have been offering to potential lenders, and I've been finding it rather difficult to raise these funds. I was hoping someone could give me some advice as to raising capital Successfully. Any and all tips from other investors/lenders is much appreciated. Thanks.
What is your track record? How many flips have you successfully completed? Are you putting ANY money into it?
Investors have a problem when the owner of the project has no "skin in the game" (I know, cliche right).
If you have nothing to lose then you are much less likely come to the table when something goes wrong.
Not likely you'll get many takers for being in second position for only 12%. The risk of a serious, perhaps total, loss is very high. My rule of thumb is that if you want to fix and flip and have good lending sources you still need about 15% of ARV of your own cash.
Try other sources:
- credit cards or credit card cash advances
- Home Depot or Lowes credit cards
- Personal loan from a bank or credit union
- Loan against a vehicle
- Sell something
- Second job
- Friends and family (only if you're willing to risk losing a friend or hearing about how you lost some relative's money at every family reunion.)
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Thanks for the advice.
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