Hello! I am a new real estate agent and designer in Ann Arbor. I have family members and contacts with 10+ years experience investing in real estate. Because Ann Arbor isn’t the $100k or less housing market, I’m wondering the best way to finance $300k-400k homes with $50-70k of investment funds from fam and friends. Other ideas? It seems conventional lenders want the property mortgaged in the investors names and that’s not something anyone is interested in doing. Would appreciate any direction in financing rehab/investing opportunities here. Thanks!
@Nerissa Sarantos What type of investing are you going for with these $300-400k properties? Are you flipping, BRRRR'ing, buy and hold? Your strategy will help guide your financing options. If you are flipping or BRRRR'ing, $50-70k might get you the down payment on the lower end of your price range, but how are you paying for your closing & holding costs, and rehab? If you are buying and holding, do you have sufficient cash reserves? You might want to take that $50-70k and look in a lower price range in the southeast part of town or Ypsi.
Keep in mind that money from family and friends would be considered gift funds if it hasn't been sitting in your own personal account for awhile (at least two months), and conventional lenders won't accept gifted funds for your down payment. A portfolio lender might be more flexible on that point, but they'll want you to demonstrate that you know your project numbers from acquisition all the way through resale with contingency plans.
Thanks so much for getting back to me. A little back story...We helped a friend flip and really wanted to keep the process going. Bought for 350k. Added 100k in renovations Sold for $825k. These are not the type of opportunities/spreads that are abundant here, but I really enjoy renovating the older homes near the university and hospital. Will take some planning. I do have 2 brothers with 500k cash to work on one rehab at a time, but unsure how to go about letting friends and fam in on the action. I can cover some of the costs as well, but may have to use their money for other projects, not the downtown ones. Can use their gifted money, let it sit over the holidays perhaps and be ready for a spring market on something smaller and save the pricier houses for full price investors I guess.
@Nerissa Sarantos I imagine you're focused on SFH, correct? I went to UM for grad school, and am always tempted to go for a MF or a large SFH as a long-term hold. This would be student housing so a totally different ball game.
Are you focused on flips only at this time? Have you explored the student housing market at all in AA?