How do I find homes to flip with no money down (NYC area)

Question

As a newcomer to the world of Real Estate investing, how should I start considering the competitive NYC market? Looking to purchase undervalued properties financed through hard money and flipping for a profit. Any advice would be greatly appreciated.

Jarvis Smith · Answer

I believe it would be very difficult to start flipping with no money down. Most hard money lenders require some skin in the the game. Most would be 10-20% down to get started. I'm on my second flip and each time I have needed about 10-20k down. My advice would be save money, get an owner occupied loan only takes about 3% down, keep it for a year while you fix it and gain experience in rehabbing. Then sell it. That's what I did and it worked out great to gain some working capital.

Good luck

Tatiana Gershanovich · Answer

Here is a review about DoHardMoney.com:  https://www.biggerpockets.com/forums/22/topics/237570-dohardmoney?page=1#p1834784

Tatiana Gershanovich · Answer

Nope, it's never the case. Even in such situation they will want money down ("skin in the game") or cross collateralize a free and clear property (won't happen very often) or if you already have a loan with the same company you are buying another property and the first one is on the market already, they sometimes can use the downpayment from the first one toward the second one. If you find a hard money lender willing to give 100%, please, let me know.)

Kyle McCullers · Answer

@Tatiana GershanovichTheir website advertises 100% financing in special situations.  My understanding is the HML would finance up to a certain LTV of the ARV, say 70%.  So if I were to get a property undervalue and include a rehab budget that met that 70% or under I would essentially be able to acquire, rehab and sale the property without using any of my own cash.  Is this realistic or is this perfect world?

Jacque Fairbourn · Answer

Disclosure - I am Director of PR for Do Hard Money

@Devin Durjanwe don not lend in NYC at this time, but I've included some information about our program here. We wish you well, and should you determine you want to flip houses in a state in which we do fund deals we would be delighted to work with you!

At DoHardMoney we do things a little different than most Hard Money Lenders and as a result we’ve disrupted things in a way that competitors feel the need to raise doubts and concerns about our systematic approach and our business model.  In addition, we occasionally get individuals that “know someone” that’s done business with us and because of the unique approach new investors can get confused on the process we follow.

So here’s a breakdown of questions and concerns that frequently come up.

• 1.First and foremost, if you are a customer and you’ve had an experience that’s caused you any frustration we’d invite you to contact us directly and give us an opportunity to resolve your concerns.
• 2.Most Hard Money Lenders require 10-20% Down, decent credit and some experience.  We have no down payment requirements.  If you have 10-20% down we might not be the best option for you, but for the individual that’s looking at a high ROI by not having to bring a lot of money to the table we might be your best option.  Also, we work with investors that have bad credit and we don’t require past experience.
• 3.Our Interest Rate is 15-18% as an Annualized Rate.  Our standard loan is a 5-month term which puts the effective rate at 6.25% - 7.5%.  So a loan of $100K would have an interest rate of $6,250 to $7,500.  Compared to a loan with a 12% interest rate you’re looking at a difference of  $1,250 - $2500.
• 4.Each property does go through an evaluation process where we send out 2-3 local independent evaluators to the property to determine the After Repair Value of the property.  They are local licensed real estate agents that are active in the local community.  They pull 3 active and 3 sold comps in addition to completing an interior evaluation of the property with an initial breakdown of needed repairs to get the property in resalable condition.  The evaluation process does require $650.
• 5.In part, with the evaluation process, you are paying for a quick turn time.  Our Evaluators will be out to the property within 24-48 hours of us reviewing your loan application with you. If the initial numbers look good there’s no time to waste and we understand the need to get the results of the evaluation back to you ask quickly as possible.
• 6.The draw back to an appraisal, you’re hanging your hat on one individual’s opinion, the turn time is 5-10 business days, appraisers’ expertise is in establishing the As-Is Value not the After Repair Value.
• 7.We do require a $2500 deposit to get access to 100% Financing.  We will finance up to 70% of the ARV with no required down payment.  If you’re purchase, rehab and closing costs are 70% or less you will bring nothing to the table.  In addition to this, the deposit gives you access to the following:
• a.Advanced Deal Analysis Software – enter the purchase price, rehab costs and After Repair Value and we’ll give you a comprehensive break down including costs, net profit, and potential cash to close.
• b.Access to Proof of Funds – 24/7
• c.Contracts and Checklists
• d.Additional Tools & Resources to help you avoid common pit falls in evaluating, rehabbing, negotiating and reselling the property.
• e.Your first evaluation is covered with the deposit.
• f.If the needed funding is more than 70% but it’s still a profitable deal, we’ll work with you to potentially wholesale the property and still make money on the deal.
• g.The remaining $1850 is rebated back to you once you resale your first property.
• 8.Just like every other Hard Money Lender, one of the biggest challenges is helping new investors get dialed in on establishing accurate After Repair Values.  Most complaints on bigger pockets are customers that are frustrated with the After Repair Value that’s established by our local evaluators.  It can be disheartening when the values don’t come back as high as hoped.  This frequently is a case of overly optimistic investors looking at a deal from a best case scenario.  When there are disagreements with the potential borrower we do provide a dispute process allowing the customer to have us take a second look at the evaluations.
• 9.We’re not pretending to be something we’re not.  For a lot of new investors with limited options we are often times the only viable option they have.  We’re more than happy to give you a comparable breakdown of how our costs and cash to close compare to other Hard Money Lenders.

Tatiana Gershanovich · Answer

@Kyle McCullersDid they tell you they will do 100% financing? Usually, the only way to get 100% financing is if you have a free and clear property and hard money lender will cross collateralize that property for the amount of down payment that you need on the property you want to rehab.

Kyle McCullers · Answer

Are all hard money lenders requiring down payments in the Seattle area? I was looking into a company called dohardmoney.com.  Have you heard of them?

How do I find homes to flip with no money down (NYC area)

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