In the past I have owned multiple duplex properties, I have excellent credit and a verifiable ongoing income above $300k a year as a small business owner. I currently have about 250k in savings and do not own any real estate. I am planning to start buying property for long term rental ownership. My question is simply what is realistic in terms of ongoing financing. Ideally I would like to get connected with a central funding source that as long as the deal makes financial sense it gets funded so I can focus on finding the deals and not the hassles of securing financing for each of them.
If what you say is true, your most realistic activity will not be securing financing, but finding deals.
If you’ve owned several duplexes you already know there’s no such thing as ‘central funding.’ Every bank has something different to offer, at different times, and it’s always a search for the best financing terms at the time you need financing.
With $250,000 available for investing, you should consider moving up the food chain to apartments. With this much you can buy something around the $2.5M range.
Or better, you should keep your $250k in the bank, and learn how to do ‘no down deals,’ and use the interest off your $250k to vacation in the Bahamas on the weekends.
I pm’d you an excerpt from Robert Allen’s book “No Down.” It outlines a bunch of ways to invest without your own money.
So finding an reliable private deep pocket investment source is not really possible?. As far as no money down deals I have limited information regarding it but from what little I do understand they tend to be very hard to find deals. I am just wanting to buy decent rental properties at fair prices on an ongoing basis. I am not looking for the once in a lifetime deal but I want to be able to focus on finding the properties knowing I have the financing resolved ahead of time as much as possible. I can go very slow and self finance thru the standard 20% mortgage route but would prefer to scale quicker with the right funding lined up.
No, I didn’t say that, and that’s not what you said you were looking for.
If you just want a deep-pocket financier, then you’re just going to have to start asking people with money if they’d like to finance your deals. This will likely be way more expensive than simply going to a bank.
Otherwise, Wells Fargo has about $1.5T to lend. And so, does Chase. And so, does Bank of America at ‘decent’ rates (compared to say, 1979).
I don’t know of any more reliable, deep-pocket, money sources that lend investment money than these.
Well, you just have limited information. Seasoned investors learn how to use other people’s money in a way that their risk is limited to their reputation, but not their bank account. Think ‘Donald Trump.’
Of course, I’m not suggesting you have to become Donald Trump. I’m just saying that DT uses other people’s money to make money.
Practically, the report I sent you, shows you almost 50 ways to use OPM effectively to invest in real estate.
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Meantime, I can understand why you would think these deals are hard to find. These deals are made, not found.
It’s a matter of understanding why and how your offer will benefit the sellers more than the conventional terms, and how to frame your offers in such a way that the sellers (or buyers) can appreciate what you’re offering.
At the same time, you’re wanting to limit your negotiations to people who have problems. You are always looking for problems to solve.
Otherwise, if you’re not looking for problems to solve, you’ll find all sorts of sellers that will only accept full-price, cash offers.
I call those seller a ‘dime-a-dozen.’ And all I can say about that is, “Good luck making any money anytime soon, with that strategy.”
Issue:
You want ‘decent rentals at fair prices.’ Pfft.
You need to pick an option. Decent or fairly-priced.
Otherwise, there is no such thing as making money on decent rentals purchased at a fair price. Never mind that a fair price is subjective.
Notwithstanding, you make your money when you buy. And in order to make money when you buy, you buy things that have an upside potential, either because of the price you negotiated …or the terms you negotiated. It makes little difference which.
Otherwise, you’re paying too much, for too little.
[size=12pt]I find, negotiate and close on ‘once in a lifetime deals,’ once a month. It’s a matter of actually looking and making offers to motivated sellers (and buyers) and solving problems for them.
For example, I just found a 3-2-2 that’s been empty since February. The owner moved out, and she’s had no offers. It’s a beautiful home. I am buying it for the cost of a notary, and will resell the house by financing a new buyer who’s got $25,000 down he’s willing to blow on a nice house.
I’ll capture (create) a $200/mo. payment spread.
I found this house by ‘accident,’ after deliberately driving in a neighborhood that I wasn’t familiar with. I had no idea the seller was motivated, much less had been trying to unload this house since February, and… had dropped the price already trying to drum up some activity.
The issue is, I gave her what she wanted; I solved her problem. I gave her the price she was asking, if she was willing to give me the terms I wanted. She agreed, and so I’m making $25,000 now, $200/mo. over 60 months, and another $25,000 when my buyer eventually pays me off.
Can you do this? No. Not before you realize that these deals are not once-in-a-lifetime.
I negotiate variations on this theme with all sorts of sellers and buyers, and yes, I have lots of practice and have negotiating skills under my belt, but this isn’t rocket science.
Rocket science is trying to make any money investing in decent rentals at a fair price. I mean, that takes a skill I don’t have.
If I have to pay a fair price on a decent rental, then I must get steal terms. After all, something’s got to be a steal. Either the price, or the terms, or both. And like I said, those once-in-a-lifetime deals come once-a-month, but only for those that can recognize a problem and solve it …with either price, or terms, or both.
First off all I want to say thank you for taking the time to respond and provide all the information you have. What I am trying to get at is essentially some sort of single source financing meaning I go to one person/company to get it. I am thinking 1 deal per month (i.e duplex in most cases) in the 150k to 250k range. I know I can get funding with 20 to 25% down but that is going to push my financial situation so I want to know is it possible to do it with 10 to 15%. With something in the 10 to 15 range I can buy one property per month. I don’t care if it is a traditional bank or private lender as long as the rates are not crazy.
Lots of good advice javipa. Indeed I agree to hone in on what exactly you want to buy (end) and work backwards. The loans/mortgages are the cost of doing business. Yes there are private investors out there.