Help me over this hurdle..


I just stumbled on this forum awile back and I have been reading the post now for awile, I know this is a place full of knowledge and I would just like to ask you all a question.

Here is my story and scenerio, I have been reading lots of books, free courses, and many websources on REI and rehabbing I would really like to start doing some rehabs. I have been out looking and watching my local market and have found some homes of interest in the past, but there was always one thing stopping me from diving in any further and that was the confidence to know I had money to close a deal. I for one do not have it sitting in a bank account or anywhere else for that matter, Myself and family barely scape by right now with all our debt, house is tapped for a second and credit cards are getting pretty well tapped.
Iam not saying that I can’t pay my bills right now but there is not much left after bills are paid.

So where does a guy turn for $$ to do deals in a situation like this, hard money lenders? Are they going to loan me money if I am currently holding a good chunk of debt already barely making it with no rehab experience?’

Thoughts, help, sugestions, info Greatly appreciated…

Thank you all for your time!

Hi Buswell,

All the lenders you work with will have different criteria for lending you money. I won’t lye by saying credit doesn’t matter. But if you’re working with a private money source (such as a rich person or group willing to work with an investor), credit might not be as big an issue as it would be for working with a traditional money lender (bank). My success story is that I got started in rehabbing while in college and without a lot of money in my checking account. I was lucky enough to meet all the right people who took me under their wing and showed me what I needed to do. I currently get my “rehab” loans from a mortgage broker that deals with a bank. It’s the only bank I know of that does 80% ARV at 6.25% with no money down. This has allowed me to do some good deals. 65% of ARV is more common, but just means you’ll have to be more picky in your house hunting. This website has a list of HML’s you can contact. Don’t grow disheartened if you can’t find a lender that meets your criteria. Before I found my current lender, I was just about to a point where I thought the whole RE thing wasn’t for me. I am really not one for rejection. But it’s part of the game.

There are a lot of success stories on this website that have encouraged me. But just a word of advice, don’t get too financially strapped. RE is a great way to make money, but if you don’t have any emergency funds, it’s also a great way to lose money. Maybe you could start by wholesaling or bird-dogging. Those are pretty goods ways to build fast capital. If RE is something you feel is just necessary for you and your passionate about it and willing to do your homework it will probably work for you. Good luck and merry christmas. Hope this helped.

Well My advice to you would be to just find a mortgage broker who is willing to work with your creative finances. ther are plenty of programs that do 100% financing so just check your FICO socres and see if they meet those requirements…

I agree with the two previous posts, finding a lender that can work some creative deals for you is your best bet. I started investing earlier this year and now have 5 properties including my primary residence.

Here are some techniques that I used:

  1. Borrowed equity from my primary residence.
  2. Obtained extra cash at closing of my first deal
  3. Located reliable local investors to partner in on some deals that would net us both proceeds. A win-win situation.

Once I have the cash I need to close on another property, for myself, I then make the move on my next property. Some as rentals and some for flipping.

Don’t be affraid, you’ll never know if you can do it until you just make the move. I invest by Nike’s trademark saying, “Just do It”. (all rights reserved by Nike)

Good Luck!

I disagree with your stategy. I don’t think you should start out trying to acquire property, or trying to find a lender – even a hard money lender – to front the financing for a purchase.

My thinking is that if your family is just scraping by, you have leveraged your home to the hilt, and are maxing out credit cards, you don’t want to take on any more liabilities right now.

Instead, learn how to birddog deals for other investors and collect a birddog fee. Get properties under contract, then assign the contract to another investor for an assignment fee. Only after you get some cash in hand and build a cash reserve, will you be able to afford the holding costs should you acquire property to flip. Until then, just do deals that generate income with no downside cost if they don’t work out.

Dave has it right!!! The last thing you want to do is set your selfup for a big fall. Take it slow try to find someone who will let you in on the part of the deal if you do all the leg work. Build up cash and then go out on your own. Dave is right on great advise

I don’t know if there is a truely risk-free strategy, maybe Birddogging is it? Maybe that is something that you should consider. I only know what has worked for me and has resulted in great gains for my first year. At this point I have paid all of my high interest personal loans and still have plenty remaining to work on other deals.

If birddogging works, then more power to you. I never recommended following my methods, only stated what I have done and my experience. Of course I wasn’t in debt to my ears either and had worked on raising my FICO above 720 one year before purchasing my first property.

You need a strategy that works best for you based upon your current financial situation. If you’re already maxed out on credit it is highly unlikely that you could make a loan happen anyway. I guess I am more willing to take a risk then most , but the rewards have been great in my case.

Great Prosperity to Everyone in 2005!

Don’t forget about buying property with little or nothing doen…dah. options, lease options and subject to’s are a great way to get started–I did 2 short years ago and currently hold over !.4m in property with over 1/2m in equity. I wouldn’t motgage myself in a property unless I KNEW it was paying for itself–but that’s just me.

Don’t give up!

I’m sure you’ve heard by know (from the amount of replies); but a hard money leander could gaive a sh** if you’ve been evicted, in bankruptcy and in the middle of a divorce. They only look at the DEAL. They lend money on the property ONLY, that’s why they do 50-65% or so LTV and want a 1st position. You could be the biggest loser on the planet, if you can find good deals there are lenders who’ll lend on it–also called a
“NO-DOC(ument)” loan in the biz. You’re trouble will be sifting the sub-prime folks from the true hard money lenders. Sub-prime guys want all the loans they can get, are not afraid to forclose (not that they want to) but will require paperwork on you. Do your research and find true hard money people that won’t rob you blind and you’ll be ready to put all that studying you’ve been doing to work.

Good Luck

I agree with John and Heather HML don’t care just as long as the deal makes since.

And you do have to know how much risk you are doing to take by birddogging or wholesaleing and if you are going to do this you have to know that with min risk you are going to get MIN rewards

With MAX risk = MAX rewards.

I would recommend doing a combination of birddoging-wholesale and Partnering with an experienced investor with over 5 years experiencethat way you can do it right and share the profits and risk. :o