Looking for Private Lender

[Sean Wilt]

Hello,

I've been studying the fix and flip market for 10 plus years and am finally ready to get started. Looking to line up funding and am looking for a PML that can supplement a hard money lender or perhaps do the entire deal. I currently am set up in the system of an Atlanta area HML where they will fund 85%. Looking to get as close to 100% as possible.

I have about $350k in a money market account so have funds, but wife wants to keep the $ in the account and not use it for real estate investing.  I have many years of high w2 income and can easily provide tax returns, etc.  My credit score is 780 and I own 3 homes (1 personal and 2 high performing STVRs).  So all good on finances/credit/employment/etc.   

Would a PML be willing to go alongside a HML to get to 100%? I've read some posts and looks like the HML may not like that, so would a PML lend the 15% shortage from the HML and could you do that without the HML disclosure? Not looking to pull one over on anyone, just trying to figure out how a person with excellent credit and assets could get a 100% loan and if that is even possible.

I am in NW Georgia about an hour north of Atlanta.  Goal would be to do 6-8 flips/year.  Typical purchase price would be $125k-$250k.

Thanks in advance!

[Katie Smith]

Hi Sean! 

Congratulations on taking the steps to get started in the fix-and-flip market! It sounds like you’re in a solid financial position and with good credit, you could get up to 90% of the purchase price and 100% of the rehab. Happy to assist with this. 

Regarding your question about combining a private money lender (PML) with a hard money lender (HML) to reach 100% financing, you're right that most HMLs prefer to be in the only lien position on the property. This is because they want to minimize their risk and ensure that if something goes wrong, they have the first right to recover their funds.

Hard money lenders also typically want you to have some skin in the game. It shows that you’re committed to the project and have a vested interest in its success, which reduces their risk. This also gives you, as the investor, more caution when making decisions, knowing that you have your own money on the line. 

Another advantage of working with a hard money lender is that they often act as a second set of eyes on your deal. Since they're also invested in your success, they'll scrutinize the property's value, potential ARV, and the market conditions. This can be incredibly beneficial, especially for a new investor, as it provides an extra layer of due diligence.

As for private money, while it can be more flexible, it’s often more expensive than hard money, especially if you’re trying to piece together 100% financing. Private lenders might require higher interest rates or different terms that could eat into your profits.

In short, while it’s possible to find creative ways to reach 100% financing, it’s essential to weigh the costs and benefits carefully. Sometimes, keeping a bit of your own money in the deal can not only secure better terms but also ensure you’re working with lenders who are fully aligned with your goals.

Best of luck with your investing journey!