So business has been going well. Thanks to BiggerPockets, I have the best partner/mentor/construction manager that I could have ever hoped for. We have successfully worked together to push through on multiple projects. Currently we have one house on the right track towards completion, one home working it's way through probate court, and other homes under contract/with accepted offers. We have a private lender that my partner already has an established relationship with who has no problem buying the properties for standard hard money terms. Now we are at the point where all our own cash is dried up. I am almost $100k out of pocket on down payments and rehab money on all fronts.
For all of you experienced rehabbers that have multiple fronts... what should be my next steps towards getting the money needed to rehab these houses? Should I just dump any future projects and wholesale to bring the capital back? Go to the banks and start that dialogue so maybe they can work with me in the future?
This isn't a question that has a definitive answer. I am just looking for some avenues to explore for the future!
@Shayne Brescia I am no seasoned Vet by any means but I have been actively Wholesaling deals and have had great success with it so far. I have just submitted an offer on my first rehab deal and I plan to do this and continue to wholesale deals like crazy in the middle of the rehab. I have found that this is the fastest way to gain good capitol while working other projects. So wholesaling could be a good option for you.
I started out doing one project at a time (using all cash) and after 10 years I could do 30 projects at a time if I wanted. I have used some of the money for buy and holds and loan some money out.
I guess the question is, how fast do you want to grow. Yes, you can grow faster borrowing money but at a price.
Thanks @Bill Jacobsen and @JPaul Mills ! I want to go as fast as I am able to put the deals together. I have set a goal of 20 flips for 2015 and it is attainable for the amount of good leads I get, but the money isn't there yet to support them. Has anyone had any success with lines of credit from banks?
I am in Washington DC, so buy and holds are out... too much tenant protection and high cost of entry. My main focus is on rehabs and possibly wholesaling.
My limited experience working with hard money lenders and investor-friendly banks here in the DC area is that they all want you to have some of your own money in the acquisition of a property. If all of your capital is currently tied up, I would suggest wholesaling anything you get in the meantime to build up your cash.
Another longer term option is to establish a line of credit with an investor-friendly bank like Eagle Bank here in DC. They work with a lot of investor and definitely offer more attractive terms than the typical hard money lender.
As I have a relationship with Eagle bank (Home Mortgage) I will give them a call! Thanks @Robert Williams !
Hard money rates are steep but you can't beat the speed and flexibility. You should start talking to local (Local) banks. Once you've established a good track record you can get portfolio loans from them but it takes some time and many deals won't wait.
If your overal plan is to become bankable in this business then I recommend that you find a way to get these deals done. Once they're done successfully put together a little project portfolio and then start talking to the local banks about showing you the money. You'll get money. Things are thawing now.
@Shayne Brescia - Congrats on the deal flow. What channels are you using to find properties?
Regarding financing - this is a matter of personal preference. Wholesaling is certainly the lower risk option to keep momentum moving forward, ask you aren't taking on additional liability through loans. Then again, if you are like me you hate to wholesale perfectly good deals that you could rehab yourself :). I'd consider looking for additional money partners - someone with cash who can fund the project 100%. Let them put up all the money, and you and your team manage the project. This way you aren't leveraging the project with payments/interest...
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