Private $ process flow

Hi - I’m in the process of building my private $ lending program. I’ve got Alan Cowgill’s training.
I’m trying to figure out the right way of getting the cash to the table, and then putting a lien on the property to secure my private $ lender’s loan.

From talking to my conventional $ broker, most banks will not allow $ to be borrowed and then secured with the property. So, I’m trying to figure out a way around this.

Is this feasible? Get the $ to the table, close on the conventional loan, using the private $ as a downpayment - but not securing it at the time of closing. Then a day or so later put a jr. lien on the property in the name of the private lender - thus securing the cash with the house. Would this work?

Otherwise, how is this done? Please let me know your thoughts.

Thanks, Juliet

Secure the private funds against another property then use those funds for Dp on the 2nd property that you’re getting a loan on.

You should purchase the property outright with private funds and cash out refi to pay off your investors.

That is what I do as well. I will secure private money for the purchase and rehab. Following completion of the rehab I will refi and pay off the private lender. Finally I will market the property and pay off the refi.

Good luck Juliet with your deals

How difficult is it in todays market to find private lenders for 14% return for $450k if I have a short sale approved for at 65% of original loan and want to do a light rehab (using some of the private funds) then flip ?
estimating a 6 month process.

any suggestions on finding private $??

It’s just a matter of running your mouth to everyone you meet and know. Do yourself a favor and never promise any that short a term (especially on that amount of money). Always let the lender state what they expect in terms of an interest rate first, and give yourself at least 12-24 months for the term of the loan with an expected selling period of 8-12 months for higher end homes.

Tal - the way I see it, “65% of original loan” is irrelevant (epecially in some areas). What is relevant is the current value and the after repair value.

If it’s a light rehab + using a RE agent + after rehab 8-12 months to resell ???

Yes, 8-12 months. The property in question is going to be sold in the $400k+ range after all repairs are done. The market for people that can afford $400k + houses is very small. In todays market those people with the income and credit needed to buy at that range can pick and choose what they want to get into to. They are buying $400k houses in many cases for half that price. That being the case,expect your holding period to be longer if you are trying to sell at full market value.

What I would do with the short sale is to sell it slightly above the accepted short sale price and move on, since that is the price that qualified buyers in the $400k range will want to pay

BTW. if you trust an agent to sell it for you with out you doing anything to actively market the property you’re kidding yourself. take charge

thanks!!

The way I have always seen it done is exactly how you said. A jr lien is recorded shortly after close. An alternative may be to put it into an entity that gives them ownership interest equal to the borrowed amount. I would consult a real estate attorney in your state and remember that this is creative financing. Some conservative attorneys may say you cannot do it, while another does it legally 10 times a month.