Financing Off-Market/Wholesale Deals

[Jon Jones]

Hi All-

Looking for some advice on strategies for acquiring off-market/wholesale deals without being able to purchase the place with my own money out-right. I have some cash set aside and I am looking to purchase my first deal. For my first deal, I am hoping to keep my risk as low as possible so I am looking to purchase a live-in flip. Although I have some cash set aside and could finance a conventional deal (<20% down), I know you have to be able to move fast and have cash to purchase off-market/wholesale deals. The reason I would like to purchase an off-market/wholesale deal in my area is because for the most part I can't get the numbers to work for properties listed on the MLS.

I am going to continue to utilize the MLS to look for deals, but am also looking to link up with experienced wholesalers to purchase a property. Since I don't have the cash to purchase a property outright does anyone have any previous experience with purchasing a property using private capital/hard money? Since this is something that is going to take longer than a typical BRRR/flip rehab project, is getting private capital/hard money to purchase the property and then immediately turning around to do a cash out refi (assuming the purchase price is 70% of ARV and the numbers work) to pay off the lender, a viable option here?

Your help is greatly appreciated!

[Randy Sommers]

As a broker for private money lenders, I can tell you their are few hard money lenders who will loan on owner occupied, but their are a few. The second issue is that a lender for cash out refi is going to look at the ACV not the ARV has the house is not as yet fixed up, which will not give you the money you need to pay off the hard money loan. The likely interest rate is 11% on up to 15% and while that is interest only for a fix and flip, these need to be paid off sooner rather than later.