My fiance and I are looking to get into real estate, and we are planning as our first step (after making sure our budget can afford it) to get preapproved for a 2nd loan. Our first home is where we live and is mortgaged.
Is a traditional bank loan the best route for a couple with no connections? Should we even look into hard money loans or seller financing or other options? We cannot do a HELOC yet as our current mortgage is too new. Any advice is appreciated!
If loan is a good option, any lender recommendations would be appreciated!
p.s. How can we find information about local meetups?
Investor · Austin, TX · Member since 2017 · 91 posts · 106 votes
8y
I'm assuming you're looking for a buy-and-hold... 2nd loan is definitely going to be the easiest to get and the best rate. Seller financing would be great, you can ask for it, but don't just look for deals with seller financing.
Real Estate Agent · Austin, TX · Member since 2017 · 229 posts · 259 votes
8y
It depends. How hard are you wanting to work on this endeavor? Bank loans are the easiest option if seller financing isn't available. Hard money can be...hard.
Lender · Georgetown, TX · Member since 2015 · 23 posts · 33 votes
8y
You should definitely learn more about financing - there are many ways to finance a purchase. The best or easiest varies from deal to deal. The type of deal ( hold or flip), your financial situation and goals, the timeframe, price range, and many other factors bear on the decision.
We are planning on buying, rehabbing (as necessary), and then renting as a longer term investment. As for hard money lending, it seems like the rates are generally higher than a 2nd mortgage's rates would be by a couple percent or more. We've heard of seller financing but we would not know how to find that per se besides just asking each seller.
One other idea we've been wondering about is neither of us has a RE license, and we've been looking into it. But, it seems like MLS access might not be a huge advantage? Some listings go on Zillow before MLS? Does anyone have any insight into that?
Lender · Georgetown, TX · Member since 2015 · 23 posts · 33 votes
8y
Many people disagree with me, but I feel very strongly that if you are not going to be a full time agent, if you are primarily going to be an investor, you should not get a real estate license. I believe many sellers will be turned off by the fact that you have a license and will not listen to you as sympathetically. Also, many agents will view you adversely. You will also be limited in what you can say and how you can approach a person who is already represented by an agent. Many agents are good representatives and helpful in a sale or purchase. Others have ulterior or competing motives and simply get in the way of an investor. If you are an agent, you cannot approach a represented seller directly. If you are not an agent, you can do whatever you want. I always start with the agent. But there have been times when I knew the agent was deliberately mis-communicating my offers for their own purposes. In those cases I had to approach the seller directly to ensure clear communication. I could not do that if I were an agent. There are numerous other reasons, but that is the main one.
Rental Property Investor · Round Rock, TX · Member since 2016 · 1k+ posts · 971 votes
8y
@Account Closed On top of what Bill said, you can find a friendly agent who will take you as an assistant, allowing you to get MLS access (you just pay the MLS dues ~$55/6months) and even go to ABOR classes. If you learn to use the MATRIX and do your own searches, CMAs, lookup tax info in Reallist, etc. - that could be an advantage if not a must in researching properties.
Lender · USA · Member since 2013 · 186 posts · 97 votes
8y
To add to the good information you already received, if you can qualify for a traditional bank or even credit union loan great, because your rate, fees, and terms will most likely be much better than a hard money loan. However, the questions you must ask yourself are:
1. How long will a traditional bank and credit union take to close the loan? If they take too long you could lose the contract.
2. How valuable is your time? You can always find ways to increase your income, but not your time. Traditional banks and credit unions typically require a lot more documentation that a hard money lender does not. Massive loan docs take time.
These are just pros and cons for you to consider. I hope this helps. Much success!