Where is the Money???

[Jason Morgan]

Good afternoon BP,

My question is I am having a difficult time getting funding to do rehab deals. I've attended my local REIA for the last two years and cultivated a small network of private money lenders. I was always told by these people and the guru trainers, "find the deal first and the money will follow". So that's what I did, spent a ton of money on bandit signs, postcards, mailing lists, postage, $400 on a direct mail copy writer to write my copy. Harassed my realtor to continue sending me listings and making offers, I did find one gem, fantastic deal but it fell apart because I couldn't prove that I had the money (pre-qual letter/proof of funds).

1. After I found the deal, I went to my first private money lender, sent him all the info on the deal and he confirmed it was a great deal. The problem was that he could not fund the deal because his money was tied up. Reached out to my second private money lender and never heard back from him after multiple attempts. My 3rd private money lender ran out of money as well and wouldn't be able to fund the deal for another 3 months, maybe.

2. Hard Money: So after unsuccessfully being able to secure private money, my private money lender referred me to a hard money lender. After speaking with him I realized that I didn't have enough cash to do the deal with him. He wanted 5pts, 15% interest and 20% down. My private money lenders wanted 3pts and 12% and would fund up to 65% ARV so if I got the property at a steal of a price no money down would be required. So the hard money didn't work.

3. Large Investor Lenders: so I go back to my local monthly meeting at my REIA and they do the rounds where the business associates talk on stage and one lender stated they do 65% of funding ARV and just points. So I submitted my application and was approved, he then asked me for my checking and bank info before he could finalize and get me the proof of funds letter. I submitted my checking and savings account which had about $4,000 in it and an investment account that had around $9,000 in it. Submitted on Friday and he said he would get back to me on Monday. Monday no call, Tuesday no call so I followed up with an email. He was always responsive on previous emails but this time nothing. So I called Wednesday and left a message. Sent another email on Wednesday, called again on Thursday no answer. I then called him late Thursday on my home phone(which he didn't have saved) and he answers immediately. Says he wasn't giving me the run around and gave me some double talk about the underwriter has been gone and once he gets back he will review it.

In conclusion, of course I lose the deal because I still have no funding or a pre-approval. I think it's horrible advice to instruct newbies to find a deal without getting financing on their first deal but that's what the industry teaches and it never made sense to me. Who shops for a car or house without knowing what they can afford? Any suggestions on how someone new gets money to do. Deal?