All Forum Posts by: Ryan Blake

@Dan Nedvidek @Marcus Crowell @Darby L Anable

If your lender isn't being upfront about costs, how the system works, what to expect, references, etc be careful. Most lenders would love for you to speak with their prior borrowers (at least good ones). A good lender would also want you to know about all the ins and outs before getting into a loan because surprises always lead to conflict. Hope y'all were able to find a good one out there.

@Jason Charboneau

Great job. Taking the first step is always the scariest but the most important. Keep everyone posted on how it goes.

@CJ Berina I am going to try and answer your questions as best as I can with the experience that I have.

1) I don't know any hard money lender that requires less than $15k in cash reserves. You would need to partner to build more capital to invest even using that route. Also, you will need to search for a good deal and a lender that will do 100% initial funding. Most lenders right now are only doing 85% or 90% which basically means you need either 15% or 10% down. Just about all lenders will cover 100% or the rehab costs but those are distributed on draws which normally means the work must be completed before the money will be released. You would need capital to start and run the project between the draw on escrow funds.

2) Buying in CA may also be difficult. Using an FHA loan you would still need 3.5% of the down payment. With $500k purchase prices you would need $17,500 just for your down payment. If you have access to a VA loan with 0% down, you would be more likely able to do this but even then, they will have cash reserve requirements that you may not meet yet unless you have other cash available to you as well.

3) I suggest going to local meet ups and REIAs where you can network and find someone to invest in or invest with. Caution! A lot of these groups will have gurus selling coaching or classes. You don't need to be spending what little capital you have doing that yet. Meet people you can team up with that have a little more experience. That will teach you and cost you less. There is value in what those gurus will offer but not equal to the price tag they will put on it.

@Chris Fuller

If the lender broke the agreement you signed, an attorney that specializes in contracts would be best. What did they violate? FYI, most lenders lose money when they foreclose on a property so it is something that lenders typically want to avoid.

@Sean Tippens I wouldn't try to negotiate on the bid. The contractor is probably trying to rip you off unless there is something crazy we don't know about the property. If that was their motive from the beginning, I think you would be looking at trouble going forward with them at any price. You should be at about $4k for materials and labor.

@Mark Moraca

1) Private money is tricky. True private money is... well private and only offered to people with relationships. Because of that, I will agree with @Nicole Heasley Beitenman and say your best bet to find a wealthy individual that is lending out money will be at REI groups or pitching the idea to other business owners in the circles you run in. There are people out there that will call themselves private money but if they are searching for people to lend to and advertising that they have money, the really are just a hard money lender.

2) I think the same answer to one is the same answer to this. Search in the local REI groups and the circles you already run in to find a partner first. Then after that, I suggest looking in other areas like the BP forums. This is where number three comes in.

3) If you are a pro member you can post ads, i.e. looking for JV partners. When partnering with someone you don't know, make sure you get everything in writing, form an LLC for the particular project, and only commit to one project at a time. Working in the space I do, I see a lot of partnerships blow up because roles were not made clear and fights ensue.

Hope this helps some!

@Chang Xiong

I financed my first flip conventionally. My second through 50th have been either cash, private money (money from family or friends), or hard money.

I recommend having savings of the cost to close (title, loan, down payment if any) and about 30% of the cost of the rehab. That would always leave you in a safe place.

Typically that is also what hard money lenders are going to be looking for in reserves.

@Dwayne Thomas It will work. You have to do one of two things.

1) Get an addendum that will need to be signed by both the seller and yourself changing the name of the buyer to the new/end buyer

or

2) Fill out the contract with "Dwayne Thomas and/or Assignee" under the buyer section

Either way, you will also need an assignment contract that will convey your option to purchase to someone else for a nominal fee. I am a part of roughly 3 - 5 assignment closings every month as a hard money lender and the typically fee is anywhere from $4k to $12k but I have seen some much much higher. It really comes down to how much room you have to leave the end buyer with. Typically end buyers will want 70 - 76% (purchase price + repairs / ARV = %).

Hope that helped shed some light on things for you. Let me know if you want to talk DFW wholesaling more.

@Account Closed

@Tim Johnson is right. To go straight to long-term, a DSCR loan is what you are looking for. And his guidance on interest and amount down are pretty spot on too. Not sure about how the report to credit agencies.

If you are ever looking for short-term, there are hard money loans that can close with no money down but they will still require payment of points and closing costs that are NOT rolled into the loan.

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