Looking for hard money lender in Missouri

[Shawn English]

Ive been looking to get into purchasing homes for awhile now but on the buy and hold side. I'm not looking to purchase and flip. Maybe later as my portfolio builds this could be a venture I would look into but for now it's more I'm looking to build a rental property portfolio. 

My game plan is to purchase homes in the $32- $45k range. Then with my 20% down I then would be financing 25-28k. I figure my loan payment to be around $250-$300 month and rent always being set atlest $500 more then my loan. Now these homes have to have equity in them before I purchase them because after 6-9 months of purchasing them I will be looking to do a cash opt refi on them to recover my original down payment and repeat the process on a new house.

My goal starting out is to be able to purchase at least 2 homes year for the first two years and then as my portfolio builds to be able to purchase three to four to five depending on how the market is.

So over this last year I've saved up to have my 20% down for my deposit and some for any minor repair or time needed to find the respected tenant. Now that I do the problem I'm having is a lot of traditional lenders won't lend under $50,000. second issue being that my credit isn't great not because of repos or foreclosures but more because of medical bills and old student loans. There are some slow pay but my debt to income ratio is a really low. Between my wife and my self we have around 115k yearly income with our debt being around 3500/month.

I have recently found a property in St Louis which ran by a real estate friend of mine that has been buying and selling homes in this area for many years now and she ran the numbers and said that it was a good deal and perfect what I was looking to do. They are the one that also suggested that I may want to do a hard money loan on this deal with my situation and all. The asking price is 34k and every house in the neighborhood values over 79k. So I would have my equity and avg rent in the area is around 900/month.

I guess what it boils down to is this has been a dream of mine for over a year and I think I have a pretty good model on how to go about purchasing and repurchasing homes. I just need that someone that wants to take a chance on me and will be able to reap the benefits of me using them over and over again to purchase houses. I'm needing to build a business relationship with someone that over the years that when I call I will be able to have the funds readily available to purchase a house.

[Bill Gulley]

Hard money will always be short term financing, never use short term financing for long term asset needs. 

Who ever ran your numbers might not be a very good consultant, numbers can always work, it's reality that causes issues.

Buying cheap houses takes cash. Buy 4 at one time a lender (bank) might do a blanket loan.

Financing is the key to the door in real estate. If it can't be financed, it's probably not a good investment property. You might think you want to hold a property forever, but that's not reality either, there are times to bail out. If a buyer can't get it financed you're stuck trying to sell to cash buyers, that usually means a lower price.

If you're starting out, raise your aim to shoot further out, buy a marketable home, not 35K but 135K. The quality of your portfolio and tenants will be higher, your expenses lower as a percentage of your income. 

Consider other options, seller financing, partnership arrangements (like a TIC) with a homeowner, buy part of the house and control the property. There will be more opportunities with nicer homes and I can assure you, your life will be better. :)