I have been reading and soaking up as much information from BP in the past couple years as possible. I have still yet to make my first investment, however I am now in a position where I feel comfortable enough to pull the trigger. I found a property in my neighborhood that I would like to put an offer on and pursue. I'm hoping you guys can help me with a question. I plan on using Brandon's coined BRRRR strategy. I have a pretty good understanding of the strategy and the steps. My main question however, is the "Buy" part. Do I need to already have a hard or private money lender in place before I submit an offer? The property I am looking at is a bank owned property. If this is the case, then how do I go about presenting the deal to a hard or private lender without a concrete deal? If I can submit an offer without having a lender in place, and they accept my offer, what happens if I am unable to get financing from a private or hard money lender? I know if "the deal is a real deal" I will have no problem getting financing but just hypothetically what IF I cannot obtain financing? Also, when submitting an offer to a bank owned property, do I need to submit an earnest money deposit? Will I lose the deposit if they do not accept my offer? Will I lose the deposit if they do accept my offer but I cannot obtain financing?
BTW - I have ran the numbers using the BRRRR calculator so I have a solid idea of the type of offer I need to submit to make it a good deal. I just want to cover all of my bases.
Thank you in advance!
You will want to make sure you have secured a private lender before you submit your offer. In the purchase offer contract they will want to know how you plan on buying the home and you may need to provide a letter from your private lender as proof of funds. Do not make an offer without private financing already in place. You will also be required to put down earnest money and usually the selling agent dictates how much that will be. You are only giving them the earnest money if your offer is accepted. You give them a copy of the earnest money check when you submit your offer.
Hope this helps.
p.s. complete your profile so ppl know who they are talking with.
You've got a lot of questions packed in here, this won't answer all of them.
People do all sorts of things, but for your first deal, I'd want to have a source of lending organized before you offer. If the money can come from a bank or HELOC you'll have a different kind of offer than if you are relying on expensive hard money. Talk to a local bank about getting pre-approved.
If you have to go with hard or private money, show them a couple hypothetical deals to demonstrate you know how to run the numbers, and ask them if they would lend to you if you found similar deals. They understand this is a chicken-or-the-egg situation, where you want to have the relationship in place before you make an offer.
When you make the offer, you will want to make it subject to financing. Find a friendly realtor or investor to talk to abut how to write that. You will need to submit earnest money, but usually not until your offer is accepted.
You should talk to a hard money lender first to know their requirements for approval before locking down a deal. Most HMLs will provide pre-approvals for a deal as well without needing for it to be under contract. Some HMLs can also provide you with a general pre-approval without any deal.
You always need an earnest money deposit to lock down a deal.
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