Bouncing from bank to broker after private money pulled back.
I have been finding out that the people that get "interested" in investing their money in real estate seem to cool down by the time I put a deal together. I am currently going through the process of getting loan through the bank. In the long run it's good and it's been my plan to refi after purchase and minor updates anyway but, I had hoped to buy with cash and do the BRRR strategy Brandon Turner talks about.
I had three people on board to "go in on" buy and hold property. I went to my bank to get pre approval and my dti was 51%. That's fixable, I've got stuff to sell and it's busy season at work so I'll buckle down and payoff some debt and add some cash to my savings.
The relationship with each of these people goes back at least one year or more and the real estate investing idea goes back six months or so....
1st person got so excited about real estate after we talked that they purchased a house on there own and are hiring a property management company to get it rented.
2nd person refered me to there friend that might be able to help me. As it Turns out he is an Independant mortgage broker. No!
3rd person was cautiously optimistic and interested. We talked the deal through on the phone, he asked me 100 questions for an hour and twenty minutes and the next day refered me to his banker who had me bring all my financials in and we sat down for an hour and a half and talked through everything in my finances and never even discussed the deals equity, cash flow, or purchase price. He connected me with a mortgage broker who called me the next day and we are working through an application now. I had to push the closing back 30 days and luckily my renters are moving out from the parents so they can stay put one more month.
I have a HELOC with $35,000 available. I planned to use $20,000 for down payment and keep 15k for closing costs and an emergency cushion.
I was seeking $60,000 for 6 months and willing to pay 10% on that loan and secure it with the property. Yes! their name on the title as the first secured party. Also list them on insurance as first loss payee. After 6 months the note escalates each month and forecloser at month 15.
Am I missing something here?
Sellers signed a purchase agreement for this 2bed 1 bath house.
Purchase price $79,000
Down payment $20,000
Rehab costs $1000
Rent is $900 and includes water and trash. Tenant pays gas and electric.
AND...I have renters ready to move in as soon as we close.
It seems like people like the idea of investing in passive real estate but any body that I've met (so far) that actually has 60-100k available is very conservative and seem to stay on the side of caution when it's time to deal.
What can I do to lock in private money for future deals?