Live in So Cal (valley). Struggling to figure out my approach on flipping houses in my area. I have a good team set up already. Agent (wife), architect (father in Law), GC (Uncle), Hvac & Plumbing (childhood friends).
I have light experience in renovating houses. I recently managed my parents renovation & all the recent updates in my house.
Me and my wife have been actively searching the MLS. We have come across a few properties that have some great potential. A couple of Short sales, foreclosures, etc. were great deals. It would have been AMAZING to have the funds to put in an offer.
1. So cal prices are much higher than other parts of the country. Most houses we're interested in range from $500,00-$700,000. which means we need a minimum of $100,000-$140,000 for a down which we don't have.
2. also my credit and income aren't strong enough to allow another loan under my name either.
So what do I do? I am 100% confident I can get the job done. If the right property comes along I know I can make some money. How do I get over the funding Hurdle?
Does a private lender fund the entire loan amount?
any suggestions, strategies or comments would be great appreciated.
Also there is an all cash Shortsale at $325k houses in that area are going for $650-$700
Have you set up your key words yet? I'd suggest you start there and set one for "Creative financing," and "financing". Any time those are mentioned on the forum, once they're set up, you'll get notified and can ask the people talking about those.
Also, try doing a search on the blog for "financing deals" a ton of helpful articles should come up.
Best of luck friend!
1. hard money lender or portfolio lenders, but they will want some money down as well. you have everything going against you, not "great" score, high prices, no money down. it's an uphill battle.
2. talk to lenders (tons of them) and see what they require.
3. buy out of state, but without your team.
In the California high price range there's always creative deals out there...You just need a little cash to get the seller to walk...It would seem with all your friends and relatives who most likely have faith in you... a little group investment company would be in order..call me anytime.
My partner (@Stephen Johnstone ) and I are also in Van Nuys and starting out in rehabbing and are in a similar-ish boat.
Have you gone to any real estate investment groups/club meetings/FIBI meetings (For Investors By Investors)? These meetings are great places to network with people who might be able to help you out.
A hard money lender (HML) is probably going to be the way for you to go, with a "gap" funder (someone to pick up the remaining portion of the project that the HML doesn't cover). HML are expensive though, so you do need to look carefully at the numbers to make sure it works for you.
I suggest going to some meetings to start networking and contacting HML to learn what their process/parameters are for lending money.
Send me a PM and maybe we can arrange to meet up at a networking meeting in the area.
@Michelle Ferrand thanks for the reply. I most definitely would like to network with my neighbors. Let me know if any meetings come up.
I have a HML who is charging 4 points up front and 8% interest. any idea what a "good" rate/points would be?
That is not too bad. We have a lender charging 3 points with 18% interest. But they fund up to 80% LTV. A lot of lenders stop at 65%, from what I have seen. It all depends on the lender really, because all of them are different. Sometimes you need to pay more up front, sometimes they charge you more in interest.
If you would like, there is a great RE meeting coming up next Wednesday (5/21/14) in Burbank. PM me if you would like me to give you more info.
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