If you had a $100,000 cash available to start as a rehaber, what direction would you go into. There are so many directions to pursue!
There is another subject similar to this! Or did you want to talk strictly rehab?
Primarily rehab at first. After a few I thought of doing 3 rehabs, sell 2, keep 1 and continue in this way.
I honestly would spend as much O.P.M. (Other peoples money) as I could and leave yours alone for strictly seasoned funds! you will have better luck in the future and get more loans done if you have $$$ somewhere seasoned! When I did flips I never spent my own money till I had enough to do them without the banks help at all! So I guess it all depends on your personal strategy is this going to be your full time job?
He is right on! The lenders will be jumping through hoops to lend you money if you keep the 100K in cash. Possibly even provide 100% financing. You can’t beat that. They pay for your investment! Good luck.
Depends on the local market. If it was me, I would wait for a downturn in a local market. You would have cash while everyone else would be in debt to their eyeballs. Just my two cents
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Most books are not that good. Mostly the only people making money with those books are the Author and the Publisher.
Btkgator,
Are you saying that if you have cash in the bank it is easier to get a loan, like a regular mortgage loan for example? What if you only have cash but no income? Does cash still carry a lot of weight?
Thanks.
Yes, cash carries the weight.
If you had $100K and you put it in a bank in some sort of savings or fund account (like a CD), then you could use that CD as collateral to get a loan, up to $100K.
Why? Because the bank is 100% protected. The account that the $100K deposit is in gets frozen. No money goes out until the loan is paid off.
What if you default? Well, in essense, you really can’t default. The principle balance of the loan is ALWAYS available to the bank.
Does that make it easier to get financing, even without a job? Heck yeah! If someone comes up to you and says, “I want to give you $100K of my money. I want to borrow $100K of your money. You pay me 2% on my deposit, I’ll pay you 5% on my loan,” would you care if they had a job or not?
Why would you do this? Well, if you have bad credit, this will improve it. Your borrow and repay, and borrow and repay again. These all show up as paid well, paid in full loans.
Also, as your pay history improves with the bank, you can ask for an increase in your borrowing limits without increasing your deposit. As the bank begins to trust you more, they’ll lend you more. I’ve seen people that have a $1 million line of credit with a $100K security.
The biggest problem with easy access to money, however, is well…easy access to money.
If you have the money to buy a “deal,” it’s much easier for the buyer to pad the numbers in their head to make what shouldn’t even be bought into a real “deal.” This happens even to experienced investors so please, buy with your head and not your heart.
Roger
Most banks want to see you have some money at your disposal. I was told that if you want a HELOC, you need to show that you have about 6 months of potential payments sitting in the bank.
check out www.moneyshark.com enter in investment loan’s and your personal information (dont worry they do not sell your info its really for Loan Officers to track there customers ) you will notice when you get to the banks at the end you will notice that the great loan programs at the end require sourced and seasoned funds if you have the $$ in the bank for a period of time the sourced part is no longer investigated for instance you buy a house and put 20k down some banks want to know where that money came from if that money has been in your account for say 3 to 6 months they no longer ask! Also lets say they require 3 months reserves in the bank so that is say 1k per month so 3k so if that is the case I personally know of some banks that will give you 2-5 houses at 95%ltv (loan to value) so now if you buy them right you will come in with 5k plus some costs to close and come out with 25k after closing so on 5 houses that is 20k per house so another 100k in the bank!
Thanks for your feedbacks. So it sounds like what Roger J is saying is that, initially, you can get a loan in the same amount as the deposit you have in the bank. Only after the bank becomes comfortable with your ability to pay can you extend your loan amount beyond your cash deposit.
You see, I am looking for a way to quit my job and focus on RE investing. The problem is that the income from my job is what allows me to qualify for the loans I want in the first place. If I quit, well no loan then (or, at least, not with as good terms as previously). I do have some cash though. So I am trying to understand whether I can use the cash in the bank to get loans and not need the income from my job. However, I need loans that add up to about 5 times the amount of cash I have in the bank. A loan that is merely equal to my cash amount would not be of much help. There is no leverage there. Do you think this can be done?
Thanks.
Why quit your job? Are you going to be like those “day traders” in the late 90’s who lost everything after the Stock Market reset (crash)?