How to start acquiring rental units with private lenders.

[Mahmood Abdul-Rahim]

Hi BP community! 

I was hoping to get some advice about something. I'm looking into getting into the buying rehabbing renting and refinancing strategy in South Florida.

My challenge is that I don't have any assets or any savings to speak of. I work full-time as a Electronics design engineer, and have been doing it for about 2 years now.

My short-term goal in a nutshell is to acquire as many cash flowing properties as I can. I'd like to start out with single family rentals, and move up to multi-family units.

 Right now I'm renting an apartment for about $1,000 a month and it seems like a big waste. I'd much rather use that money to pay interest on a private loan for three months which I can use to purchase and Rehab a property. Then cash out refinance enough to where I have equity in the property, but I can also pay back the principal on the loan in addition to a 12% to 20% return on my lenders investment. And repeat the process until I have enough properties with enough equity in them to where I can open a business line of credit and use my own cash to continue to grow my business.

My question is, how can I find private money lenders who are willing to work with me in this way?

Also, does private money lending count as a cash transaction? The reason I ask is because, I want to know if I run into any issues later on when I'm trying to Cash out refinance.

What's the best way for me to position myself to take advantage of these kinds of opportunities.

I'm looking forward to your comments and suggestions! Thank you

[Sam LLoyd]

Those are a lot of questions... Here are my thoughts on some of them.... rent:  You have to live somewhere, and rehabbing takes a lot of time/money, and is harder to do if you are living in the mess.  One house I rehabbed came with a treehouse that my wife and I lived in till we had it done.  However, rehabbing is a skill of mine.  If you can't fix the place yourself,  you probably shouldn't be planning on living in the mess.

future cash-out:  If your lender has a deed of trust against the property for the value of the purchase and rehab... you will be refinancing the 'loan'.  It does not have to be a cash out refinance unless you have other things to pay off like credit cards used for the rehab... or if you just want more money to play with. Cash out terms are a little worse, but with interest rates what they are now, I'd take the extra money every time.

How do you find these lender?  Talk to people you know, because that's a requirement.  However, without a track-record, this is going to be hard.

My advice:  Get your expenses down... save your pennies, and get an owner occupied loan for a duplex.  Depending on what these cost in your area, if you're dedicated, you can save up the 3% down, and living in the duplex with give you landlord experience, rental owning experience, and get your living expenses even lower (hopefully, if you buy right.)