Hard Money Question
Hello all,
My wife and I are going to start our investing adventure here in the near future. I have been studying, and doing my research trying to lay a good foundation for us. I have our 5 yr plan outlined and I am currently researching business plans so I can put together a comprehensive one. We are at the point where, we are never going to know until we try it.
We are going to fix & flip using hard money to start out and work our way into more passive investing. Anyway, my question to you guys/gals is....Do we stand a chance of getting a HM loan with no deals under our belt? This is assuming we have a great deal and all the numbers make sense. We do have some money in the bank, so we do have a little bit of skin. We would appreciate any thoughts or advice.
Thanks
-Jason
Yes absolutely but with no experience they will want more skin in the game and more reserves.
More importantly - you should want more reserves. You need to be prepared if something goes wrong and it takes more money than expected to finish the job.
There is a list of Hard money lenders under the resources guide above.
Good luck - Ned
Ned Carey Thank you, that gives me a little more push for the go ahead!
No advice on the HM options since I'm a newbie myself, but I just wanted to say congrats to you and your wife for doing this together :) My husband and I are also staring this RE adventure together and it's quite exciting.
Ezinwanne Hawkins Thank you very much, and congrats and very much luck to you and your husband. It is very exciting, but also stressful and exhausting:-) I guess that's why all the pro's on here keep telling us it's hard work and you have to be willing to put in the hard work to become successful. I think they're on to something:)
Thanks again and good luck to you guys
-Jason
Possible? Of course. HML will lend to new rehabbers so long as the LTV is safe for them. That requires you to either have a good amount of skin in the game, a smoking deal, or a combo of both.
I would also suggest you start talking with people you know who have money. They can be your private investors and you can use that in place of or in combination with the HML.
Will Barnard Thanks for your suggestion. I have been seriously thinking about approaching my boss about investing. He's a sales guy and I really don't want it to sound like a generic pitch. I know I will have to be confident and thorough in my presentation to him. Maybe I'll take his wife and him out to dinner and soften him up a bit:-)
Thanks again
-Jason
Originally posted by Will Barnard:
I would also suggest you start talking with people you know who have money. They can be your private investors and you can use that in place of or in combination with the HML.
Will hit it on the head with regards to how you can start and grow your business!
Glenn Espinosa Thanks I agree this is the smart way to go. If I could ask you guys another Question? How can I assure someone like my boss that their money is safe? Do I need to get some kind of insurance? I am looking for a good RE attorney, will they draw up a contract for something like this? I guess what I am asking is...What do I need to get covered before I go in and approach someone with this? I apologize for all the questions...I just want to be prepared.
Thanks
-Jason
Most HML in my area are familiar with real estate investing and know that their investment is secured by the property, so they are not very worried about their money being "safe." I mainly deal with Private money lenders that I met at my local REIA, who are also familiar with investing. This makes it easy for me to get a loan on a deal. I usually ask for them to loan the full purchase price and then I cover the rehab expenses.
Originally posted by Jason Cotner:The key there is Not to pitch him, rather take him out to dinner and somehow the conversation will turn to some RE investment project you are working on where one of your private investors just got paid 10% returns. (Something to that effect).
Will Barnard Thanks for your suggestion. I have been seriously thinking about approaching my boss about investing. He's a sales guy and I really don't want it to sound like a generic pitch. I know I will have to be confident and thorough in my presentation to him. Maybe I'll take his wife and him out to dinner and soften him up a bit:-)Thanks again
-Jason
Naturally the question will come up of how that works and then you go into the educational explanation of alternative investment options other than the stock market that actually ave security behind them (the RE itself and insurance) and that even though the investments are safer based on lower loan to values, the rate of return is higher than the volatile stock market options.
Again, the question may come up as, "we'll how do I get involved in something like that" and off comes your answer.
What ever you do, don't go or the sale or pitch on first dinner meeting. Keep it casual and informative, then change the subject to something else. The more you push at first meeting, the more you sound needy and pushy which is a turn off.
Quote: "The key there is Not to pitch him, rather take him out to dinner and somehow the conversation will turn to some RE investment project you are working on where one of your private investors just got paid 10% returns. (Something to that effect)."
This is sound advice coming from Jason! You definitely do not want to sound like your pitching an idea, rather express an opportunity instead with some sincerity.
Congrats and Much Success!
Raine
Since you haven't done this before, it is going to be tough to show him his investment is safe without having any track record. However, the one thing you can show him is that his money will be secured by a home.
And real estate is better than any stock or other business venture (restaurant, franchise, etc) that he could put it in. His worst case is not that he loses all his money which is what most of those investments worst case can be. His worst case is that he's going to end up with a house at a really good price.
The assumption, of course, is that if you're borrowing 70k from him, the house will be worth 100k.
Thanks everyone, your advice is very much appreciated.
If you need further assistance send me an email- will send you our lending criteria.