Financing Pickle! Got the Deals, Now need the Money

[Andrew Earle]

So for whatever reason, I’m having super favor in finding deals. I’ll lay out the quick history to catch you up with my current situation. 2 years ago I GC’ed the construction of a duplex on a lot I purchased from a distressed seller. (Mind you, I am not a General Contractor. I’m a linen salesman. I do know enough about building to be dangerous.) Because I found the deal and provided the GC’ing, I found a partner (MY MOM) to apply financing and fund the whole project. I condoized the duplex and sold each unit and made $26k per unit, total of $52k. My silent financial partner (MY MOM) wanted to roll the money into another deal. I found another duplex lot from a builder that was overloaded. We bought the lot for around $50k after closing fees and title work. The lot turned out to be a nightmare as it was in a zoning that required a sprinkler system. I thought I had gotten taken but my favor kicked in and the town changed the usage requirements in the zone the lot was located. The value of the lot instantly increases as a sprinkler system was no longer required and other zone changes benefited the value. I sold the lot for $67k. At this point, I had been sitting on that lot for over a year so, I did a 1031 exchange into a foreclosure I found. The foreclosure property located in Old Orchard Beach, Maine was a small 850 sf single family home that was destroyed. I got it for $112k. Aside from the fact that after about 50k of work (it was a complete gut. New plumbing, electric, roof, siding, interior walls. Everything. It was demo’ed to basically a shell) the property will appraised for over 200k, the zone the house was located in allows for me to construct 4 more units which I will do as 2 duplexes. Problem is because it was a foreclosure, I had to use all of my money plus a home equity line of credit I took out on my personal residence for 105k. I am pretty much tapped out. But while this is going and almost simultaneously, I found a nice 1700 sf cape with a 2 care garage that I purchased for $285k. Not much of a deal but after a few thousand dollars of paint and flooring, I have a corporate tenant on a three year lease paying $350 over my PITI. I financed that property with 5% down so I have a bit of mortgage insurance included in my PITI nut. Why I bought this property is because it had enough land for me to buy it in two deeds one with the house and one with yet another duplex lot. Problem is, I was not careful enough in structuring my financing and the mortgage company attached their lien onto both lots. I had begun securing construction financing for building this duplex and got approval pending a partial lien release to free up the lot. I also had begun secure subcontractors for excavation, foundation and building. They have begun work. Foundation is in and walls are going up. I have no money to pay them aside from an 100k equity line MY MOM will let me access. That should float things for a while at least until my Old Orchard Beach rehab refinances and I get about 165k of my cash back. (165k is 80% of what we believe it will apptaise for) That refinance closing is fue to happen within 4 weeks of writing this. So here’s the real problem: I’ve tapped out my resources. I’ve tapped out my mother’s resources and I just went under contract for another foreclosure for $105k. With about $25k of rehab, it will appraised for about $180k. Unlike the others where my main strategy to buy and hold, this one I will flip to get a cash infusion. I can’t finance it because it’s a foreclosure and the banks won’t touch it with all the systems winterized. I’ve never look for private financing outside of MY MOM 😂 but it looks like I’m going to need to now. Oh one more thing, just yesterday, the selling broker for another foreclosure called. I had put an offer on that SF foreclosure over a month ago but didn’t win it. The sellomg broker asked to put me in second position if the first offer fell through. Guess what? It did. Now it looks like I’ll be under contract for that one today. So, I’m going to need financing for this one to. I want t flip thisnone as well but I am very open to holding it as its im a great neighborhood and I know it well rent well and I get a ton of equity post rehab. If I go after hardmoney, what should I expect for financing terms? If a find a private investor what can I to offer them that is enticing but also fair to me? It would be great to find private financing for both but I need to know what a standard and good proposal is to approach a few finance prospects I have in mind. I’d like to only use hardmoney if I have to.