A better understanding for using Hard and Private lenders

[Grayson Grzybowski]

Good Morning Everyone,

I use to be a pro member but have cut back on my finance to put towards my first investment. After 2 years of learning, I have come to realize there is no such thing as "No money down from a lender without and deals under my belt." So my question to all of you is this.... If I get "X amount" saved up to go in with the help of a private lender, how much would they lend me to obtain the property? 

If a loan via a bank requires the terms to be conventional (5% down), FHA (3.5% down), etc. How does it work with a private lender? There is no way they lend the entire amount of the house because a cash out refi would never meet that amount after a rehab. I hope by helping me make sense of this I will have better clarity moving forward and maybe land a deal sooner than later.

Thanks!

[Don Konipol]

Quote from @Grayson Grzybowski:

Good Morning Everyone,

I use to be a pro member but have cut back on my finance to put towards my first investment. After 2 years of learning, I have come to realize there is no such thing as "No money down from a lender without and deals under my belt." So my question to all of you is this.... If I get "X amount" saved up to go in with the help of a private lender, how much would they lend me to obtain the property? 

If a loan via a bank requires the terms to be conventional (5% down), FHA (3.5% down), etc. How does it work with a private lender? There is no way they lend the entire amount of the house because a cash out refi would never meet that amount after a rehab. I hope by helping me make sense of this I will have better clarity moving forward and maybe land a deal sooner than later.

Thanks!

20% down is a MINIMUM.  There used to be loans available for investment property that were 75% where the lender allowed a 15% second.  But the second was at a very high interest rate.  Problem now a days is that prices are high and even with 80% financing most properties don’t have positive cash flow.  

You have the problem common to a lot of people getting started; wanting to invest but lacking sufficient capital.  While I don’t know your personal financial situation, I can tell you that a certain amount of capital is necessary even if one were to pull off an IMPROBABLE very highly leveraged purchase.  Here are some of the somewhat unique ways I’ve seen people accumulate capital 

1. Redirected retirement contribution to either self directed plan or to non retirement account
2. Borrowed from their retirement plan
3. Sold their boat, car, RV, etc.
4. Moved into a cheap house and used “sweat equity” to increase value and then obtained a line of credit.
5. Cashed in insurance policy they purchased years ago to help out their cousin starting out in insurance sales
6. Obtained a “pre inheritance” from their aunt
7. Obtained a bonus to switch employers
8. Worked a “side hustle”
9. Borrowed on margin against their stock investments
10. Robbed a liquor store