What materials should be on hand when seeking private money?

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What materials should be on hand when seeking private money?

Will Carson
Homeowner · Denver, CO · Member since 2018 · 11 posts · 3 votes

Hey all,

I'm completely new to this, so please feel free to point out any mistakes I make.

I've been super excited for the past few months at the possibility of breaking into real estate, specifically rentals, and more specifically House Hacking + BRRRR.

I have identified 'capital' as my critical path to making this happen. I've actually been living in SEAsia for the past 2 years, so I have no W2 income to show, which makes me nervous about getting an FHA loan for my first house hack. I also have little money saved, since I have been living on a SEAsia salary. Currently, I'm doing freelance work and some odd jobs since I've been back in the states for about 3 weeks. (I have about 3k liquid cash, and a 10k Roth IRA, no debts, monthly expense to income ratio of ~.31)

I can either go the slow route, get a W2 job, get some decent W2 income, save as much as possible and continue learning for the next year before 'starting' or, I can seek private lenders to accelerate this plan.  

I've learned a lot already, and feel like I'm about to the point where I need to just get started, go for it, and trust I will fill in the cracks along the way.

My question to you is:

What's all the information that you, as a potential private lender, would like to see from someone seeking capital?  

For some reason, I have the idea of putting together a detailed binder of my plan, markets I'm eyeing, different number projections and scenarios, etc. and understanding that binder backwards and forwards and pitching the plan to potential lenders.

Is there some kind of 'checklist' of documents, figures, etc. that I can refer to in order to make sure I have everything on hand that I might need when addressing lenders' concerns and questions, in order to convince them on my plan?

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Rick Pozos
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
8y

Before worrying about all of the w-2s, business plan, scope of work, and all that jazz, find a deal.

Hard Money or a friend or family member will lend to you if you have a DEAL. Now what makes a deal? A property that is 70-80% of Retail value and then subtract out the repairs. And how are you going to find that deal?? It will take months. It will take months of networking, meeting people at your local REIA, sending out a direct mail campaign, etc.

I dont know how you can do it from SE Asia. Maybe you can. But I would spend some time and effort on marketing to find deals and not worry about w-2 because there is no way you are going to get an FHA loan anyway. Focus on getting a deal.

So what happens if you have a deal and cant get financing? You call or email or text your friends who you have from networking so much and you wholesale it to them for a few thousand $$ and keep looking for the right property for you.

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  • Frank Y.
    Lender · Philadelphia, PA · Member since 2017 · 225 posts · 72 votes
    8y
    Will Glaeser Lenders want to have your income (tax return, pay stubs, w2), credit, experience, bank account, LLC operating agreement, purchase agreement, scope of work, market comps, property evaluation, exit strategy.
    1Reply
  • Daniel Molina
    Lender · Charlotte, NC · Member since 2017 · 131 posts · 59 votes
    8y

    @Will Carson I think it depends on the lending strategy you are pursuing. @Frank Y. isn't wrong; however, some lenders are only going to be concerned with the amount of liquid reserves you have vs your taxes, pay stub, w2. There are also lenders out there who do not concern themselves too much with FICO or even having an LLC. So do not be discouraged from his comments since they are not true for all situations.

    You should 100% have an executed contract, scope of work - if rehabbing, and a thorough exit strategy. 

    If you want to "house hack" i think you are in for a disappointment. If you go to a specialized lender you have much more of a chance to be successful since we will not ask for as much as what was stated in the previous comment. Feel free to reach out and discuss at further detail. 

    1Reply
  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    8y

    Before worrying about all of the w-2s, business plan, scope of work, and all that jazz, find a deal.

    Hard Money or a friend or family member will lend to you if you have a DEAL. Now what makes a deal? A property that is 70-80% of Retail value and then subtract out the repairs. And how are you going to find that deal?? It will take months. It will take months of networking, meeting people at your local REIA, sending out a direct mail campaign, etc.

    I dont know how you can do it from SE Asia. Maybe you can. But I would spend some time and effort on marketing to find deals and not worry about w-2 because there is no way you are going to get an FHA loan anyway. Focus on getting a deal.

    So what happens if you have a deal and cant get financing? You call or email or text your friends who you have from networking so much and you wholesale it to them for a few thousand $$ and keep looking for the right property for you.

    1Reply
  • Will Carson
    OP
    Homeowner · Denver, CO · Member since 2018 · 11 posts · 3 votes
    6y
    Originally posted by @Rick Pozos:

    Before worrying about all of the w-2s, business plan, scope of work, and all that jazz, find a deal.

    Hard Money or a friend or family member will lend to you if you have a DEAL. Now what makes a deal? A property that is 70-80% of Retail value and then subtract out the repairs. And how are you going to find that deal?? It will take months. It will take months of networking, meeting people at your local REIA, sending out a direct mail campaign, etc.

    I dont know how you can do it from SE Asia. Maybe you can. But I would spend some time and effort on marketing to find deals and not worry about w-2 because there is no way you are going to get an FHA loan anyway. Focus on getting a deal.

    So what happens if you have a deal and cant get financing? You call or email or text your friends who you have from networking so much and you wholesale it to them for a few thousand $$ and keep looking for the right property for you.

    This seems like a great strategy, thanks for sharing.  My main concern here is that I've never been through the process before, and I don't think I'd be confident enough to act quickly on a deal while also making sure to be thorough. Wouldn't a deal like that go quick?  Either way, I like the way you think, and I can implement some of that.

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