Financing 101

[Account Closed]

I have spent a lot of time really investigating the Tidewater area of Virginia and am ready to go. I have put together an ever changing list of over 27 properties for flips that will have huge returns. So, I am looking for advice on going to hard money lenders. I think I have exhausted all my local banks for a new construction and or a business line of credit. My credit is outstanding, however loans for new companies is next to impossible because I don’t have a track record or funds / equity to cover a line of credit for the amount I need. My concerns with hard money are terms and interest rates. After the first deal everything will change and may not need that type of lender again but just wanted to get the audience take before I contact them.

[Jay Hinrichs]

@Account Closed HML is going to require almost the same equity and credit and ability to repay as a bank.

if your just starting out.. GONE and long gone are the HML who loan based on equity etc.

but the reason you want to establish a relationship with them and probably bring in a equity partner to start.. is once you have half dozen successful deals behind you .. then its possible to get higher leverage from them and more favorable terms

There are HML in our Portland market that will do 100% they charge for it 3 and 12.. but its 100% but you have to be with them for a few years and show very good track record.

When I have lunch with my banker ( usually once a month or more) that's one of our conversations about how they have NO appetite for new flippers or would NEVER loan to a newbie on new construction.. just not worth the risk .. one bad loan and it wipes out anything they may have made on  10 good ones..

If you have these hot deals find a hot money partner and get at it.. this is one of the biggest failures I see in those starting out.. they don't want to share can't put the deal together and just miss out totally half of something is better than 100% of nothing and or taking forever to get going.