Is it possible to raise the down payment from private lender

[Manuel Savorelli]

And borrow the rest from conventional bank? 

I was considering raising 20-25% from PML and getting the balance from a conventional bank.   Is this one of those cases when I won't get approved due to lack of "skin in the game"?

Would I have a better shot at a portfolio lender? 

I'm trying to leverage as much as possible and come up with least out of pocket. 

Many thanks! 

[Chris Mason]

Needs to be secured, preferably by real estate. Private second mortgage on some other property works. 

DTI still needs to work.

[Kenneth Garrett]

Manuel,

If you use commercial loans it won't matter.  Residential loans are more particular. The commercial loans are a bit higher interest rate and they typically are 5 year balloons.  I just refinanced with a commercial loan paying back my private investors and my rate was 5.15%.

Good Luck.

[Manuel Savorelli]

Thanks guys. 

As an example, I was considering a single family @ ~100k.  I was thinking of raising 20-25k from PML and getting conventional loan of 75-80k.

Would I be able to secure the PML by adding him to mortgage?

Another option could be, what if I raised the full 100k by 4 x 25k per PML?  Would i be able to secure mortgage by %?  Give each PML a 25% lien on property? 

Thanks much. 

[Wayne Brooks]

No.  Any private lender will want a mtg, and most won't take a second mtg.  Forget the "4 different lenders" idea, they can't "share" a mtg.

[Sekelle O.]

One cannot have a deed of trust with multiple beneficiaries? Try googling it.

[George Krajacic]

Hi Manuel,

In regards to your question, “Is this one of those cases when I won't get approved due to lack of "skin in the game?" Your assumption is correct. You will not be able to get conventional loan since the bank will know that you are recording a second and do not have money for down payment. The same is true of PML, you will not be able to get a loan without a down payment.

The way to go around your problem is to create a partnership where the partner provides the funds for down payment and the partnership get a loan. However, at this level, you are faced with a new set of issues.

Assuming the potential partner is not a family member you will need to convince him or her that his/her money will not be at a high risk. To accomplish this you have to demonstrate that you know what you are doing, the purchase is at an excellent price, and you realistically forecast a profit including a margin of safety. To prove all this one must provide a fix- up estimate, timing schedule, and market analysis to show how the profitability of the project is good.

However, if you do all this but this is your first project, it will be tough to find a partner for the down payment. So now the question is how do you overcome a lack of experience problem? This is simple. Find excellent property and partner up with an experienced flipper. If you do that once or twice you will be on the way flipping properties yourself.