All Forum Posts by: Willie James

Hey Karishma. The number one rule with investment is, don't invest any money that you cannot afford to lose. If you lost all the money you had to invest today, would it ruin you financially? Maybe ask your husband, how much he feels you need in your emergency fund for him to feel ok about buying that first rental. Don't worry about the market. There will always be houses to buy in any market (even if you have to invest a little farther out from where you live). 

Shera, well yes, you would be financing the entire purchase with debt. Hard money is borrowing against an asset (a 'hard' asset, thus the name). What I suggested, is that some investors use personal or business credit to fund down payments. Still debt but unsecured(not secured by an asset, rather the borrowers credit).Some lenders don't source down payments.

In the above example, Sam is also borrowing. The equity in the property is enough to secure the loan needed for the entire renovation. He is still borrowing, it just happens that the equity in the property is so high that that he doesn't have to use his own cash to secure the loan.

Besides debt financing, the only other way to finance is to give up equity. For example find someone with enough cash to secure and/or renovate a property, then pay them from proceeds of a sale or new loan.

Every "zero-down" strategy is either debt financing or equity financing. I find looking at things through that lens helps clarify what's going on. 

Lowest I've seen from hard money lenders I've looked into is 90% max of purchase price and 100% of rehab and a little bit below 8% for fix and flip. Mind you experience is the driving factor to getting the best terms and rates for hard money. A brand new flipper needs to expect 10+% interest 80% of purchase price and 100% of rehab. 

If you're going to buy and  hold expect to put 20% down with experience and 30% down with none. Lowest rate I've seen is a little under 4% but expect to pay put more down with that rate.

When you say hard money are you borrowing hard money for the rehab portion only? Would a margin loan work? That way you wouldn't have to sell your stocks. This would only work if the lender you are working with doesn't source funds (some do some don't). Also, are these 401k accounts? If so you could look into taking out a 401k loan as well.

So you wouldn't be putting up anything as collateral for the loan? Just secured by their trust in you and your project? What if you can't pay them back, what's their security?

 Do you already have the 275k to complete the rehabs? Do you have a lender lined up for that refinance? Do you already have a lender lined up for the land? As I understand this this you have three things going on here:
-275k needed to complete rehab.
-350k needed  to buy land.
-Need lender to finance land and or business and properties being rehabbed. Is that right?

No money is cheaper than family money, but you and your partners could pool zero percent interest credit to get to 350k (assuming all of your partners have excellent credit like you do). That'd avoid involving family in your business if that's a concern of yours.

If you are not a US citizen, you will need to have a US social security number or ITIN and a US mailing address to qualify. This is in addition to the credit utilization requirements to qualify, below 30% is usually what they look for. If you have any other questions feel free to reach out to me directly.

Ryshawn, if this is your first property, find an mortgage broker that works with investment mortgages. Expect to put 30% down for a conventional investment mortgage and full doc underwriting.

I don't know about that, but I do know that some investors get hard-money that doesn't source the down payment, then borrow the down payment. That's a common 'zero down' strategy.

Really, the only way to find out is to call banks in your area. If anybody does offer something like that, the smaller the institution the better. Small institutions have an incentive to create those programs; the long term relationship is more important to them than the interest on the loan. They can also reasonably mitigate their risk with hyper-specific market knowledge.

If your deal is that good, why not just partner with someone who has the money? Equity is generally more expensive than debt, but more valuable than a lost deal. 

Some hard money lenders will work with him if the foreclosure was 3 years ago and all his other financials are in order ( credit score, income, no other bk's or foreclosures).

Natali, when a property is refinanced a new loan pays off the old loan. The new loan is then paid back by the mortgage holder. The mortgage holder can be a natural person or an entity. In this case your LLC would be the new mortgage holder whose loan pays off the old loan. Whether or not you can get cash out depends on the difference between the equity in the house and the size of the new mortgage. Your lender should explain how much if any can be cashed out.