All Forum Posts by: Brandon Rich

Hi Nicholas,

Aside from all the other great advice you received, I wanted to add something:

Show as much available funds as possible! I know this is way more than what you asked for, but new flippers should know the below…

If this is your first deal, you will want to show as much as possible in your bank account(s). Since the rehab budget is usually on a draw basis, you’ll want to show the lender enough funds for closing and to get the rehab going, and then some... I am also seeing more lenders offering their first-time borrowers Dutch loans (interest on the full loan amount), instead of a non-Dutch loan - which is interest on just the funded amount during the loan period. That will make a big difference in where your monthly payments start.

For example - if the purchase, after your down payment, is $200K and the rehab is $100K, that makes the total loan amount $300K. With a Dutch loan at 12%, you’re looking at an interest only payment of $3K/month for the initial term period (usually between 6-12 months). With a non-Dutch loan, your interest only payments would start at $2K/month and increase as you take out your draws during the rehab. Granted that these types of loans are meant to be short term loans with no pre-pay penalties, it makes a difference when it’s interest only payments.

It wouldn’t be a bad idea to work with a local broker. A good broker should know the above and help guide you in the right direction. Going directly to the lender may cost the same or more in some cases. Most brokers are paid by the lender and the lender usually charges the borrower the same points at closing with or without a broker involved. Some brokers are also correspondent lenders and have access to private capital, allowing them to provide more creative lending options (like getting a second mortgage on your investment property to repay your down payment after closing 😊). I’m already way off topic, so I’ll stop here lol!

Best of luck to you!!

Something to consider here... There's a number is private REI lenders that are not going to lend on an investment property if the consignment is crazy high. The bulk of your clients are going to be investors that may be relying on private lending to purchase and rehab your wholesale. The idea is to find the property (that's not listed on the MLS) and then pitch it to an investor. All it takes is a simple Zillow search to find out the listing history. So, if you find a property listed on the MLS for $160K and you are going around trying to pitch comps and how it can make this or that while your asking $200K+, keep in mind the MLS will be the first place the investor will start.

It's good to understand what your end buyer needs too. Not a bad idea to connect with other wholesalers to get an idea of the market and areas to target, but also try to keep an open mind and connect with investors that buy from wholesalers too. It's critical to understand what due diligence you need to do as a wholesaler. 

Hi Chris, you can have your LLC setup in one day if you wanted. Are you contacting the hard money lenders directly, or do you have a broker working with you? A broker should be able to guide you on how to do this and also know what the lender would accept. The docs needed are typically the same with hard money lenders. If you are the sole member, the lender may just arrange for a Single-Member Affidavit at closing. So, no OA would be needed if that was the case. It really just depends on what the lender requires...

 Hi Kimberly! I have a pretty good network in GA. I would love the opportunity to take a look at your next FnF project. Because of your experience, I may be able to provide you with some great lending options. 

100% is out there. You can probably Google search and find one, or get a broker to help you with that. I always advise against it because the payoff is crazy. If your exit strategy is to hold and rent (DSCR type loan), then you probably won't even get enough on the refi to cover the payoff. It's still an interest only loan and all those payments are due at payoff. There are usually higher points charged on the total loan amount that will also be due at payoff (depending on the lender). And if that doesn't turn you off, then the fact that the docs required are like a bank loan probably will…

Keep in mind that the ARV you get today will change by the time your payoff is due (in a good way or bad way). Most DSCR loans will top out at 75% LTV with a refi. In some cases, the borrower will end up getting another bridge loan because the rate adjustments with a DSCR loan can be crazy, while a bridge loan is more cut and dried. I can keep going, but I'll stop lol!

Do your own math and maybe consider ordering your own BPO with the as-is and arv. It’s important to do your own due diligence.

Hi Christian, are you looking to raise capital to lend in Illinois or just need a lender that will lend in that area?