We are an experienced (residential rental) real estate S-Corporation (from Houma, Louisiana) (15 years) with 21 rental units (all single family homes) in our portfolio with a property awaiting refinance now. We target and purchase properties from 50-75% LTV after rehab. I’ve been and bought houses many times from Sherrif Sales. We are experienced in flipping properties although lately that is being frowned upon locally. Economy I guess?? But the “flipping” opportunites are definately plentiful. Both my partner and I (who are professionals in the Healthcare Industry for over 30 years) (we’re both homeowners as well) have great credit scores (me-approx. 700…my partner 800). My wife is also a 15 year veteran real estate agent. All of our properties are worth approx. $2.6 million dollars total, and we only owe approx… $650,000, so you see we have a lot of ecquity. The local banks are more than willing to loan us money, but the turnaround time lags a great deal and limits us the potential properties we can purchase then turnaround and refinance them. Properties are purchased with a line of credit (in which our bank limits us up to $100,000) from a local bank. Our rental receipt income totals over $18,000 per month. Our approach is very conservative and is geared to use as a a vehicle for retirement.
Our specific need is to improve the turnaround time of refinancing and adding more properties to our portfolio to increase our rental income. (we would like to add 3-5 properties per year)
To increase our line of credit to $750,000 (to flip higher price houses ranging from $100,000 to $750,000)
Need refinancing on a 3BR 2BA property: approx. 60%LTV ($57,000) 6-7%; 20yr term
Any advice would be helpful, although Private Money is what we are searching for.
Private Money is the way to go! Your credentials will satisfy private investors and they understand that the banks are not lending as pre 2006. That is what I do for money needed on deals. There are trillions of dollars sitting in IRA accounts. You need to learn how to lead investors to a self directed trust document so that they can fund your deals. A good interest rate will interest most investors as this will be secured by real estate.
Most of my funding is from IRAs. Although I keep my deals small these days and do a large volume, if you need larger amounts, you can create a limited partnership that holds a mortgage on your property, then have your smaller investors have a proportional share of that 1st mortgage in the LLC.
Regarding Cowgill, his program is most professional and complete, however, it is pricey! My humble opinion is that it is written for most novice investors who are not action oriented. Take action, start talking to people who own IRA accounts, get into conversations and let them know they can earn a good yield secured by property. This is what I say for my small deals that I pay 18% yield, “How much of your IRA is earning under 18%?” They always answer, “All of it.” Now I’m in the middle of a presentation to secure money for my deals!
This is what I do, this is what I teach when I mentor other investors.
I enjoy reading Robs posts as he provies some interesting info.; however, I too am confused.
I’m not sure how Robs advice could be applied to buying house with private money, as I am not sure how you would convince investors to invest in an LLC to provide you money that you may or may not use to buy a house (playing the investor skeptic). I suppose you would create a purchase agreement with the LLC and use that as proof that you will be buying the property and have all money go into escrow until closing. Hopefully he will clarify this at some point.
While 18% is high, after the origination fees and other fees are applied to a HML will likely be over 18%.
What I do find interesting about Robs advice is that it may serve as a way to obtain money from multiple investors without having a license to sell securities.
I never said that I pay 18% on 1st mortgage money…I said I pay 18% on small notes to investors on mobile homes, cars, trucks, trailers, business equipment, etc. The reason is that if you create a note at 100% yield, you can sell it at 18% and make a nice profit while at the same time satisfy your investors for the risk they are taking.
On first mortgages, I’ve paid 12% and under down to usually 10.9%. If you buy at a good discount, you can afford the higher interest short term and make the deal work.
The LLC idea essentially allows you to obtain several investors with one property mortgage without worring about blue skys rules. If you maintain debt partners in an LLC rather than equity partners, you can accomplish your goals.
rob,
I routinely fund 1st position hard money loans at or above %18 (% and points combined) at %50 LTV…So I guess I feel special…I would never do hard money at anyless or any other position than 1st position…To compound that I also prepay myself for the entire term of the loan…And I hold the deed in lieu of foreclosure…You must find some desperate uninformed investors…But there is a sucker born every day…Its good for you…
Well, now that some of you have elequently compared me to Madoff and made insinuations of my suckering investors, how about you accusers taking a reading and comprehension course or actually read and digest my postings prior to giving your opinions on what you think I said from only reading parts of my posts.
You have missed the very points of my postings. The line that says ‘how much of your IRA money is earning under 18%,’ has opened endless conversations about my deals to obtain private funding. I do pay 18% on mobile home notes. So does Lonnie Scruggs, Jimmy Napier, and all the successful investors/mentors for over 20 years! How can you compare this to Madoff!! Your contempt is beyond reproach!
No wonder so many are failing…you don’t get it. You cannot obtain private money without engaging people in conversation. Go ahead and point your fingers at me…you stay broke and I’ll keep doing deals. I’m giving my investors a fair exchange for their risk and giving them solutions in the event of defaults for additional security.
You want to comment? Try reading the full posting and comprehend before you react with your insults! All you are doing is showing other readers how inept and uniformed yo can be…this is so sad!!
Rob,
I never compared you to madoff and I also dont think you were implying the rest of your post to me…All the same if you can have people invest the way you do I sincerely mean it when I say congrats on finding a sucker…Because anyone that invests that way is a risk taker…Im not saying you are doing anything wrong on your part…Keep in mind that the %18 you representing is unsecured…Thats why I say risky…To you it may not be risky and it seems you are very confident in your ability and thats admirable…I have enough risk from 9 to 5,so in real estate and HML i want to lessen the risk as much as possible…Just wanted to clarify my position on this topic because when you said so many are broke or going broke and not making money I know you were NOT directing that at me…
I have been doing what you are doing for a while as well, and I have found the answer. I have a source for corporate LOC’s
that will attach them to your S- or C-Corp. They start between $350k and 500k and will grow from there. Once you get these funds, you never need to ask for money again…this means you can actually use these to buy and hold until you refinance them out. I’ve never lost a deal due to funding taking too long…while others are scrambling for money, I just write a check.