Deal Structuring With Additional Collateral Property

[Adam Dylik]

Hey everyone, 

I recognize this is my first post, however I have been a lurker and avid blog reader here on BP for a couple years now. With that being said- I recognize that I am not asking or begging for anything. This is a legitimate question I have and would appreciate any and all advice, connections, or interest in my problem. As with forum guidelines I am NOT offering or asking for investment. Now that that's out of the way:

Problem: Raising capital for the purchase and renovation of a flip property I currently have under contract closing on 2/24 or earlier if chosen through Fannie Mae for a HUD reverse mortgage foreclosure property located in Park Forest, IL AND how to value an additional free and clear property that is cashflowing as additional collateral and security to the investor(s)? (I have a standing offer for the purchase price at a ridiculous rate currently that is from a well off friend and available last minute if need be)

Details: I am 50/50 partners with my grandfather. My grandfather is a general contractor specializing in repairs. renovations, and maintenance for several large property management firms on the south side of Chicago since the 1980s. He has also completed 7 flips in the past before 2009. Myself- I have been working on and off for him since I was 14, being out in the field and running the office. I currently do not hold "employment" with the contracting company and am a professional poker player who does not report much verifiable income. Due to my grandparents health, they have reduced the size of the company and business to a point that cash flow is a problem for traditional loans both business or personal. 

We own 3 FREE AND CLEAR properties with a combined value between 450-500k based on recent comps and have been having trouble pulling a heloc or getting a portfolio line of credit. Side note- my grandmother who is also on title will NOT sign off on a standard cash out mortgage on a property or the whole portfolio. I have two good friends who are mortgage brokers in the chicago area who have both been unsuccessful in finding a line of credit whether it be investment or as a personal on a personal residence. 

One of the properties is currently rented for $1200 a month, newly renovated as of January this year that I did with my own two hands and only subbed out the landscaping and the upgraded plumbing, and valued at 80k (clearing $940/mo after taxes and insurance) Link to pictures and video walk through https://drive.google.com/open?...

The deal I have under contract is a couple blocks away from this investment property, under contract for $37,739, renovation budget is $42k. Consistent and comparable recent comps have been selling for 130k. I just completed the inspection and know the house is solid but does need a few major replacements- windows and roof. I know what the property needs. I know my numbers, have the subs and the knowledge of the local labor market along with the remaining manpower from our contracting company in addition to my skilled labor daily working on the flip and managing the project.

With the knowledge that I would be looking to raise roughly 75k and having 5-8k in the game ourselves for a 6-8 month flip from close to close, what would be fair rates either interest wise or even equity wise from a private investor(s) IF we are also willing to back the investment with a free and clear, cash flowing property as additional collateral to effectively de-risk the investment to almost 0 for the investor. How do you value the extra security of an additional property that covers the investment on top of the subject property being flipped? Knowing what hard money rates are for (suckers) and knowing what private money reasonably goes for to those with good track records, where would you set your cap as the party looking to borrow the capital for the project and say that this is too much for me to give up with the security being offered on the investment (I recognize this is a personal opinion moreso than not, but I'd like to hear where your ceiling would be if you're in my shoes). 

My apologies for such a long post- it always seems like most people who have an intricate problem or question do not give enough pertinent information to begin with so that others can give informed and specific answers. 

I appreciate your time. 

Adam Dylik