Which comes first the team or the financing?

Question

Hello BP experts. I am BRAND new to this industry and I like it so far. I have watched hours of videos and webinars and I am continuing to learn. Isn't it funny how you can hear something or watch it on YouTube and think you have it all figured out. Well, that was me, but I know now that I must ask pointed questions before I proceed. That's what brings me here.

My wife asked isn't it better to get the money lined up before getting together a contracting/rehab team? I told her that everything I have heard says get the team together first. That way, when I have a deal, the team is ready to go. I don't think we will have a problem with financing. I have money and I have solid credit, so I think we will go to banks for smaller loans and to hard money lenders for larger deals - (which I intend to stay away from for now because we are so new), but I did see a six unit that is fully occupied and I'm going to run an analysis as soon as I finish typing this question.

My question to you is, in your opinion, which comes first, the team or lining up the money? I figure you have to have a property or a deal on which the lenders can make a decision before you line up any money. Second, what are your reservations, if you have any, about using hard money lenders? Is that a risk we should stay away from or is it the only way to get bigger deals - and remember, we are in Hagerstown, MD.

Thank you for entertaining my question.

Julius L Evans · Answer

Greetings. What a powerful working tool. You ladies and gentlemen are a wealth of knowledge. These are all valid points and very well regarded. I have funding lined-up already and we are very specific on the type of property we want to pursue. We will drill down even more closely, just to ensure that we aren't spinning our wheels. I think one of the problems with a new investor, because I have cash, is that everything looks attractive. So @Bill Kenny and @Bill Goodland, thanks for the advice. Going forward, I think we will resist the urge to look at buildings that are out of our core focus. I would like to ask some specific money questions and I understand they restrict those type questions in this forum. Would you object to receiving a private message?

Joanne Eriaku · Answer

@Julius L Evans, feel free to connect with me. My initial thoughts about the contractor are that if he seriously wants to do this as a business, then he will definitely get his ducks in a row whether that means insurance, licences, equipment, having a team etc.

Julius L Evans · Answer

Good Morning Everyone! I am new to the forum and I must say that the information I have gained on here has been invaluable. The first property I looked at, I contacted a realtor with what I thought was a deal that was too good to be true. It was a fully occupied, rent generating triplex that had been on the market for like 283 days. The owner was offering seller financing and this was to be my first step into the arena. Long story short, after contacting the realtor and our communication was daily, to next thing I know, she is no longer returning my calls or texts and the property is now pending. Now, I don't know what happened there, but suffice to say, I am working with someone else and I have kissed that property goodbye.

Next property was what seemed like to me a good deal and that's the one I originally mentioned on here. It was a duplex with all the trimmings, but as it turned out, only one side was for sale. The listing made it look like the entire building was for sale.

These are learning lessons upon which I am building my toolbox. That brings me to today. While driving for dollars (a termed on learned here on BP, but have always done it), I found a FSBO duplex, vacant, and as it turns out, it's a property owned by the husband's wife and they just want to get rid of it. We walked the property and it needs work. I've placed an ad on Angie's list for general contractors and once I get three different contractors to provide estimates, I will have an idea of what to offer the seller for the property. As we were leaving the property the seller says, "Now listen, the price I asked, don't let that scare ya. We're done with this. Now, I'm not going to GIVE it away, but if you are serious, don't just disappear." He indicated to me that they want to get rid of the property. He also indicated that he owns others. (A potential for another purchase down the line). I have a few funding options and I believe the local banks will roll the construction costs into the mortgage. (This has the potential to be a true no money transaction).

So, my question is First off, is it authorized to share a link in here? Second, do these numbers raise any red flags to you? If you cannot get this, can you contact me so I can pick your brain? Thank you.

https://parrotpg.com/analyzer/...

Bill Goodland · Answer

@Julius L Evans nah I don’t mind, PM away man. Happy to help if I can

Anthony Dadlani · Answer

@Julius L Evans

Get your lenders or money partner lined up first. No use finding a deal and not being able to purchase.

Best of luck in all your endeavors.

Julius L Evans · Answer

@Odie Ayaga, thank you for your thoughts. That makes sense. The money is a part of the team. Great logic.

Bill Kenny · Answer

Hi Julius, I wouldn't starting getting a team involved without having financing connections or private money / hard Money lenders. Its hard to know what direction to look when you don't know your current limitations .. Why look at 250,000 buildings if you can only purchase a 125,000 buildings. Find out how much money you have access to and then start the search. Your team will respect you for not wasting their time on projects you have no business getting them involved in. Your team should include money partners. It doesn't hurt for you to run the #'s on all types of deals in the meantime!

Bill Goodland · Answer

@Julius L Evans first of all, I would recommend being very clear and focused on what exactly you’re looking to do whether it be flips, rentals etc. and honestly I think it can be a little bit of both. Go to meetups, get contractor, agent and lender referrals. Talk to wholesalers and say you’re looking for a deal. Once the deal comes along, reach out to those team referrals because they honestly property won’t care much until you have some business for them, but still great to get to know people

Odie Ayaga · Answer

I'm with @Joanne Eriaku. The usual question is money or DEAL not money or TEAM. The money is part of your team. Get everything lined up before the deal as best as you can so you can execute when you find it

Julius L Evans · Answer

Hello Joanne, it took me a moment to figure out the hard money and private money lending acronyms, but I got it now! Thank you for replying. Let me assume that you are saying that I should have both things lined up first, right? I agree. I was thinking to line up the contractors - in fact, I texted my general contractor first. That brings me to another question.

My contractor has worked on a few things in my house, (replaced shingles on my roof, cement in my basement, something in my garage), and when I asked him tonight if he is interested in working with me, he agreed, but he asked if he has to be licensed and insured. Now, I would imagine he must be, right?

And thank you for the clarity on my previous question.

Which comes first the team or the financing?

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