Own it Outright, No $ for Rehab, What Next?

[Marcus Geiser]

I have purchased a house. Filed the deed in Allegheny County. I own it out right, no mortgage. 

3/1 in Quaker Valley School District. ARV$120K or conservatively speaking $100K is a no brainer and where I have run my numbers from. Rehab under $45K

I would like solutions for the flip. I have no credit, score is low, with no W2 income, I have read about creative strategies and what not but need to see how it would work in the real world to accelerate my process. I can self fund and slow grind. Just don't want to follow that route. 

HML does not seem to fit cause of credit, do not understand private lending, please give some direction to research.

[Alex Breshears]

Hi Marcus! I can possibly help in the private lending part of the question. Private lending in the way I define it is individuals who have capital that they want to lend out to active investors.  This could be capital they have direct control over, like a retirement account, savings account, cash value in a life insurance plan, etc.  Another option is they work with individuals who have capital and match them up to loan opportunities that fit what they are willing to fund but collecting the documents, doing underwriting, and getting the package all squared away for a capital partner to say yay or nay to.   The reason I bring this distinction up is that we are a lot more flexible because we don't have the secondary markets dictating what they will buy, a business warehouse line that depends on certain boxes being checked (like minimum credit scores), and we are not brokering to hard money lenders so we really have zero control over the deal.  This makes a HUGE difference as the active investor because the source of the capital will dictate the limitations and experience a borrower has.

A private lender may be willing to lend on something like this, especially at a ridiculously low LTV, and depending on the current condition of the property and your experience managing renovation projects. They may require a draw instead of just giving you $45k and say spend it wisely. A draw model would have you fronting a certain amount of the repairs, getting invoices to show as paid from the various contractors, and obtaining mechanic's lien waivers in order to then get a certain amount of money refunded back to you, which can act to replenish your capital available to the next stage of the renovation. Whomever you talk to about the loan, make sure you understand how the capital will come to you and when, and by what process the draw happens.

If you want some additional information about private lending, BiggerPockets does have a book on that now! My co-author and I will be speaking at BP Con in about a week about diversifying your sources of capital to weather the upcoming recession and why it matters to active investors. 

The link to the book about private lending is here: https://store.biggerpockets.co...

I hope that helps!