My name is Rose Wilkinson and I am a seasoned investor in Oklahoma City. I have over 12 years experience in the retail and wholesale sector of Oklahoma City. I purchase steeply discounted 1 to 4 unit properties in the Oklahoma City and 20 mile radius area. I do not have a buyers list, because when I list my houses on Craigslist, they usually sell in 1 to 7 days.
I assign my contracts, meaning I do no rehab (for any newbies) But it is not always convenient or possible to assign my contracts before I have to close on them. Naturally, any potential buyer (assignee) wants to tour the property they are thinking of purchasing. Here are the reasons why it’s not always convenient or possible to assign contracts:
- Seller is ashamed of the condition of their home, and does not want several different investors parading through it
- Seller has collectibles / valuables in the property, and does not feel comfortable having several people tour the home. (This is very common, because if a house has sat vacant for awhile it is normally used for storage by the seller.)
- If the property is crammed from floor to ceiling with personal property, it is hard to show the property or for the potential buyer (assignee) to inspect it.
- Seller needs cash within 5 to 10 days due to personal emergency
With this being said, I need some advice about where I can find short term funds (90 days or less) for wholesale deals. I do not want to use hard money, because it is too expensive. Since I am not rehabbing, there is not very much meat left on the bone. Most of my deals bring in an average profit of $5,000 to $7,000 dollars. Any advice will help, thanks!
I don’t see why no one has responded to your question! With the information you provided it seems, to me, that there are a few methods you go with.
The simplest, would be to open up a line of credit on a property that you own (your home)? You can then, simply write a check from the credit line to cover your purchase and pay it back when you sell, or assign, the property. If you have a business history, you may be able to do the same with a commercial line of credit. This way, you only use the money for as long as you need it which keeps the finance charges low. For example, if you get a line of credit at 5% and only use the money for 30 days, your charges will be 5/12% which is only .42% of the deal. You should be able to handle this in your margins!
The next idea would be to take some of your profits from each deal and build you own fund to finance these short term loans. I don’t know how big your deals are but this can be a great strategy. You COULD even make some extra money lending to other investors needing bridge loans.
You can talk to a few hard money lenders in your area and see what kind of terms they might give you for short term requirements. Remember, 18% interest is STILL only 1% if you hold the money for a month. If you are going to do this regularly, they may do it for a flat fee or only charge a minimal rate.
As self directed IRA would be another possibility as would using crowd funding to build a reserve that you could use. The problem with crowd funding is that you will be expected to pay dividends even if you do not use the money.
There are probably more suggestions that I could make, but this should get you started thinking outside the box.
While I am typing . . . WOW! One to seven days on craigslist? Things must really be hopping there OKC!