All Forum Posts by: Account Closed

There are lenders that will do this and even defer interest payments until the end if needed, but usually what ends up happening is something called "net funding" where if you get a loan for lets say 100k, the fees and first months interest will come out. let's say those fees and first months interest is 5k, then the amount that will hit your account is 95k. The lender gets their fees since you still owe that entire 100k at the end of the project. (this is not considering other fees and the other months of interest payments). 

Usually, lenders will want to build a relationship with you / ensure you have a stellar track record first before doing this high of a LTC. 

Hey Janea! From a private lenders perspective that lends on specifically flips, I can tell you that I want to be in and out in the shortest time frame possible right now. The uncertainty of the market has a lot of other lenders like me sharing this kind of thinking. I would not buy if your plan is to sell in two years, since there is a very real possibility of it not making a profit. That being said, if you plan to sell in 10-15, that's a much safer plan. You could always refinance and turn it into a rental if you want to move after a few years. 

Hey Angel! I am a private money lender and can share a bit out what we private money lenders look for: 

Generally you need to be able to explain the deal. A few questions we would ask are: 

Why do you like the deal?

can you give a summary of scope of work with budget? 

how long is this going to take for me to get my money back, generally known as "check to check" 

Who is managing the deal? That would be you in this case overseeing operations

Talk about comps in the neighborhood? Can you provide accurate comp. 

Purchase price what’s the deal?

Where is value being created whether it be through improvements or under-market purchase? 

After that, you can get into financing. Generally, since you are a first-time borrower your terms are not going to be as good as they could be. Also since you don't have a ton of experience that is also going to affect your rate and terms. That does not mean it's impossible! you just need to either find a partner with money for the deal or come to the table with your own cash for the downpayment. 

 I think there was a typo or glitch or something, I'm seeing: 

Purchase price: $10 <- 
Cash invested: $52,000
Sale price: $800,000

 This ^^^ though if you lived in it for at least a full year you could sell it after (assuming you were able to get financing)

Hey Michael! First things first, your first deal is not going to be your last deal. Your goal of creating financial freedom is a nice one and one I share, but it's not going to happen overnight. Your first deal should just get you IN THE GAME, not WINNING THE GAME. the goal of your first deal should be NOT TO LOSE. What that means is ensuring all of your costs (mortgage payments, taxes, and insurance, reserves etc) are as accurate as you can get them with a bit of margin for error. 

Also keep in mind the cheapest deal is not always the best, often times lower-priced property is in worst area that can cause you a lot of tenant troubles. If you are investing out of state that can be a pitfall as you are not familiar with the area and are likely not driving through it on a weekly basis. 

Hey Mason! 

As a private lender I can tell you here is what id be looking for from a first time borrower, and are the best things to get strait before you get networking! 

Why do you like the deal?

Summary of scope of work: what repairs and improvements are being made.

Expected duration of the deal check to check and why (how long do you think this deal is going to go?)

Who is managing it? Are you handling the interactions with the contractors or do you have staff? 

Talk about comps in the neighborhood? Justify the ARV to me with this <-

Purchase price what’s the deal?

Where is value being created?

If you can answer these questions and you have a great track record, you may get a private lender to fund the entire deal. But it is unlikely they will fund the FIRST deal. Build a relationship with a lender and don't just try to find the cheapest one. In the long run the relationship you have with this person will make you way more money then if you saved a point or two on a few deals. 

If you are unsure of a particular deal, ensuring you have multiple exit strategies can shield you from potential plans going off course. For instance, I was chatting with a borrower who had a good ARV but would lose money if they rented it out. They are betting the entire project's success on hitting that ARV. Ensuring you have multiple ways to make or not lose money can really help you and your lender if you use one get comfortable with the deal.

 I agree with this, as a lender as long as you have title + title insurance it does not really matter how you decide to hold ownership (in terms of who) 

Sounds like this borrower has some mindset/outlook things to work on, but that will come with experience! I love to see other lenders winning :) Congrats to you and your borrower. 

Are you doing any "wrap lending" with your investors or are you all pooling the money together in a syndication style offering?