How does funding$$ work?

[Hudson Walker]

Question I have regarding the transaction and use of funding.

I’m looking to buy distressed single family properties, fix and/or buy hold or sell.

Most of theses homes banks will not fund due to the work they need. So I need have either private/portfolio/hard money funding.

So if and when I find a lender willing to work with me how does the funding work?

Do we open a joint bank account?

Do they put money into my back account and then I go find a property?

Who’s name is on the lease?

Are we both co-signers?

[Nicholas Covington]

@Hudson Walker

Any sort of lender is normally going to want the home as collateral to lend you money. You will apply with them, normally when you find a home. You will open up title and you will be the personal gurantor but they will place a lien on the home to collect should you stop making payments. At the closing table they will provide the funds to the seller/owner of the home.

If you are getting rehab funding, they might provide you the funds directly but I would like to believe that the funds would be placed in an escrow account and paid directly to the GC or you should you need reimbursment for fronting the rehab costs upfront. Most will not give you the money directly as this is risky.