Funding Real Estate

[Jordan Mobley]

So I've learned that it is a common thing for start an LLC for your rentals properties. Some people make an LLC for each individual property they buy, or make separate ones based on if they partnered with other investors. Doesn't that open the door up for things such as business entity funding, such as loans and lines of credit (not credit cards)? If so how do qualify for these lines of credit or loans BEFORE you have bought your first property? Any thoughts or insights to this?

[Tom S.]

@Jordan Mobley Hi Jordan - finally circling back to your question:

"I see what you’re saying. So what if you don’t have any properties what would you recommend to gather capital for funding deals?"

For starting out, savings is generally used for the down payment.  It doesn't have to be much: for your own property (primary residence), it can be as low as 3.5% down.  For investments, one of my first deals was a seller financed house for $80k and the seller asked for 10% down.  So with the down plus closing costs it cost me $9k to get a property.

Another deal was purchase + rehab financing provided through a local bank.  They required 20% of the purchase price of $50k, so $10k down.  They provided the rehab funds of $25k and after rehab it appraised for $110k.  I was able to refinance and pull out my original $10k down plus some of the profits, which I then used for the next property.

So it can be done!