Is there such a thing as 100% Funding?

Question

We operate in a "niche"...We are a HUD authorized real estate brokerage that works almost exclusively with investors (both wholesalers and rehabbers) helping them acquire undervalued properties.Lately we have had a lot of interest from new investors that are excited about the market segment and can't wait to dive in, but have a potential entry level problem... FUNDING!To help them enter our world(Bigger Pockets) and be successful, it would only take one or two deals before they were able to use the more traditional funding methods, but in the beginning, it would help a lot if they had access to 100% funding for flips.Can anyone help out these new investors and assist them in launching their business?Would ove this to become a clearing house of reputable lenders that the newer investors can go to to launch their business.Thanks in advance for helping...

Daniel Dietz · Answer

It will be interesting to see what others have to say here. I will say that it CAN be done, but it is RARE.In my family, we have done 3 of these in the last two years, BUT two of them are owner occupied and one was intended as a flip but I decided to keep it and rent it.In my case, the flip, I bought a foreclosure that a professional flipper that I do a lot of work for (Im in construction) was re-flipping. He had too many to work on at the time. It was assessed @ 140K, he bought it for 70K and resold to me for 80K if I remember right. Nothing down and interest only for 6 months @ 6% (he borrows his funds from retired family members that are happy to lend it to him @ 3% instead of waisting away in CDs @ 1%. The fix funds I borrowed from a long time friend also looking to get better than CD returns who only charged me 3%. SO the entire project $0 down. THIS WAS BASED ENTIRELY ON THE PERSONAL RELATIONSHIPS I HAD BUILT OVER 10 to 20+YEARS - that is why it is rare, but can be done. Both of my kids, in their young 20s have bought houses in the last year with $0 down also. This could be a good strategy for someone that does not mind a little work and move again in a year or two to get started. Daughter #1 bought short sale assessed at 178K for 120K and got a 20K fix up loan with $0 down as it was a In House ARM from a local bank that will get refinanced when the work is done in the spring. She had almost 30K saved towards house but is investing it differently for now.Daughter # 2 is buying a home assessed at 140K for 92K and using a WHEDA Loan (state housing agency) that requires $0 down for first time home buyers. This is interestingly an assumable loan also. She also qualifies for about a 20K fix up loan if she wants one too.With these last two, you would obviously need to live there for a year or more, but it you can come away with 30-40K in equity, it is not a bad way to start.Dan Dietz

Darren Eady · Answer

The best way to measure if a loan is going to perform or not is the amount of money the borrower puts down when they buy a property. The more it HURTS an investor to walk away from a property and a loan, the less likely it is going to happen. So the answer is, and should always be, NO! There are no 100% funding programs for any lender that would like to be repaid. If you do find one a lender being willing to lend the entire purchase price, take them up on it . . . they won't have money for long!

John Rogers · Answer

I have responded directly to you and thanks for the feedback.John Rogers

Jamie Ware · Answer

I currently owe one investment property which is cashflowing well and my primary that I have had for 10 years now. My question is similar....I'm a loan officer so I know the numbers of a deals. So just this week I have come across deals here in PA outside of Philadelphia. 1.) City property was an auction deal starting bid was $100 went for $3850 city home but the area supported an ARV of $60k. The property needed about $30k of work. Yes I could have purchased the property but needed funding for the rehab. Would a lender take this deal on?2.) Bank-owned listed at $117,000 my realtor partner felt we could have went in at $100k and was sitting in an neighborhood that support an ARV around $230,000. It would need cosmetic and staging I guessed about $20k of repairs. Could have put back on the market for resell within 90 days for $199,900 (Quick sale). Would there be any liable lenders that would have done this deal 100% purchase and 100% rehab cost? If there are private investors out there that lend in PA that would like these type of deals please contact me directly. I do come across these types of deals and have Realtors sending me stuff too. I just don't have the working capital to go after these deals when they come available.

Darrell Shepherd · Answer

John, give me a call. I've got good money if they want to borrow.More importantly, and it'll depend some on the deal and the borrower, but I do some JV stuff and can bring all the money and a lot of experience if I think they can handle managing the rehab and my LTV is low enough I can take over and get my money back if they are Fing things up.

Jeff B. · Answer

Hard Money, Private Lender, Owner Carry.

John Rogers · Answer

By the way... we have three HUD deals in process right now that are very interested in this type of funding...We will happily pass information to these three investors.