I have a deal. Now how do I get funding.

I have a deal. Now how do I get funding.

Hillsboro, TX · Member since 2018 · 7 posts · 5 votes

Hey BP I am very happy to talk with you all again. Over the past months I have been gaining as much knowledge as I can to better equip myself for the coming year when I will truly start my "wild adventure in the Jungle that is Real Estate". In search for this knowledge I have talked to many, many investors and even local lenders, I have learned to analyze deals and run my own numbers for my end of the deal, but what about the funding end? Of course I assume that a lender will be looking for some of the same things that I would, but the also be looking for other specifics that would over their own hide. What are some of these specifics a lender might look for in a deal? What are the obvious make or breaks to any deal? What I really need to work on, being a first timer, is the structure of my deals so that they would appeal to lenders so that they may over look my inexperience. So BP, how do I need to present my deals for a lender to take that leap of faith because I understand a lender will have more fear for my own failure even when I do not.

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  • Investor · Minneapolis, MN · Member since 2017 · 103 posts · 53 votes
    7y

    Cash is king they are going to look at your finances.  If you have the down payment money, good credit and job you will get the loan there is no secret.  Real estate is not rocket science, its the number one way for the average guy to get rich.

    But if by lender you really mean private money lender well then you're going to have to be lucky.  Because I would not give a guy one cent that told me about a great deal but didn't have any money, but some private money guys have figured out how to make this work.  They run their own numbers then do a character assessment on you then make you sign a bunch of legal documents that basically say if you f'up the house is there's.  Because the big guy is not going to lose money to the little guy, how life works 99% of the time.  Good luck!

  • Lender · Elmhurst, IL · Member since 2018 · 100 posts · 24 votes
    7y

    Most lenders want to know your assets, investor experience, credit scores, and about the property itself to determine how much to lend you. It's okay if you're a new investor, but you're going to need decent credit scores, and decent cash reserves to start.

    As a newbie most lenders will lend on 80% of the purchase, and 85% of the rehab. Initially you'll need to have your fair share of skin in the game since you don't have a track record, but as you gain experience lenders will finance bigger portions of the deal.

    Best,

    Dave 

  • Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    7y

    @Cody Johnson-Winsett  Echoing David's comments, in my experience credit and cash reserves were the strongest factors.  Particularly for rehabs, the lenders wants to make sure you have the cash to finish the job, even if things go over budget.  They also mentioned even if not focusing on credit score, they review credit history to make sure there's not a history of settling debts for less than owed.

    Good luck!

    - Tom

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