Any types of finding Investors?

Question

I have found more than 20 deals in the last month but can't get any bank or private lender to back me.  I've found that instead they buy my deals.  I had this happen twice now I just keep my info to myself.  I want to rehab properties full time but trying to get funding is a nightmare.  I own several properties and when I had alot more cash than I do now I backed myself.  No banks want to loan money and hard money lenders only want to lend larger amounts than I need.  I have tried everywhere and no luck!  Does anyone have any advice?  I might just have to go back into the construction business full time.

J Scott · Answer

My biggest impediment to expanding my business is that I'm a major control freak, and I wouldn't be comfortable investing in locations I'm unfamiliar with.  These days, I prefer to stay within about 50 miles of home...

Joshua Houchins · Answer

J Scott,

I'm an unlimited General Contractor here in NC. I have about 2500 subs that I have used for my construction business.  I also do a lot of CAD design for them as well.  If you are interested in doing any partnership deals on some property here in NC let me know.

Shane Woods · Answer

Sounds like Joshua needs to move to Cobb County, GA

J Scott · Answer

These days, I'm doing about 50% my own deals and about 50% consulting/rehabbing for others.

I've had a number of investors who want to partner with them bringing the cash and me doing all the work (50/50 equity split), but I don't have enough of my own deals right now that I want to give up 50% of the profit.  If I can start finding more deals, I'll start doing some of those partnerships where other investors are bringing the cash.

And, while I'd be happy to do mentoring/consulting partnerships -- where others bring the deals and I bring the experience and some/all of the cash -- I don't currently have any other investors in my area who have approached me with those types of partnerships.

Joshua Houchins · Answer

Oh,  and yes I put them under contract first and then once it expires they jump all over it.

Joshua Houchins · Answer

I'm having trouble refi my rentals right now a lot of banks in NC are not interested in using rentals as collaterial.  Our local REI clubs are not very good. (at least the ones I have been to a lot of the people have no experience.)  I have built, remodeled and designed over 500 hundred projects in the last 10 years.  The people who I have done remodels for and rehabs are not really interested in lending money on the my projects or telling me who they are getting money from to fund there jobs.  I have actually tried the partner approach and really no results.  Banks that I do have relationships with are not interested in the risk of buying and selling properties.  I have a few more that I'm meeting with today hopefully they will work out.  Thanks for the help.

Leo Kingston · Answer

It's really not a trick, it's the old-fashioned necessity of having a partner, having your lender relationships set up in advance of finding the deals. Once you have that system in place, and it can take a while since you have to prove yourself to others, usually by making them some money, then you'll be set.

Shane Woods · Answer

@ J Scott: Thanks for that explanation.  Your site was my inspiration to actually do something other than read.  Its interesting to know that you're doing it for less than most GC's.  You never mentioned (that I saw) whether or not you were putting any of your cash into the other rehabs.  Thanks for clarifying.  It's an interesting business model.  WHEN I figure out the cost estimating part in my area, I'd Love to apply it to my RE business as  well.

You said you're open to all types of partnerships.  Do you do many partner deals these days?  Equity splits, or coaching/teaching type like Joshua and others post asking about?

J Scott · Answer

While I'm open to pretty much any type of partnership opportunity (if the deal is right), the rehabs I've been doing for other investors have mostly been just a flat-fee type of arrangement where I come in and take care of all details of the rehab.

Basically, I consult on the level of rehab and finishes, put together the deal analysis, help put together the budget/schedule, and then bring in my contractors, manage them day-to-day and complete the rehab for the investor as we've agreed (or as he wants).

I generally charge less than a good GC would charge, so it's a lot cheaper for the investor I'm working with to just pay me a flat fee, as opposed to an equity split or percentage.  And since I'm not putting in any of my own cash or taking any significant risk, this is the way it should be.

That said, if I had my own cash in the deal (either fully funding or partnering) or if I were otherwise taking on some risk of loss, I'd be looking for an equity split or a percentage of the profits.

Ann Bellamy · Answer

Joshua, as a hard money lender, I want to apologize for those who are scooping your deals.  Unfortunately, sometimes the reputation that HML's have is justified.  Most of the time that's not the case, you have to keep looking.  I'm of no use to you because I'm in MA and NH, not NC.

Having said all of that, if you had the property under contract before you called the lender, you wouldn't have that problem, unless they dragged their feet so long that you were out of contract.

So aside from J Scott's suggestion of finding partners, which is a good one, here is what I suggest.

Ask all the real estate investors you know locally who they use.  Ask them about their experience with the lender, and who can be counted on to not steal deals.

Go to the local REIA's and do the same thing.  Eventually one or two names will emerge.  It is true that many lenders won't do small deals, but you should be able to find one or two who will lend the smaller amounts.  These may be guys who aren't really in the business of lending, but want to lend on a deal or two.