Veteran that is new to real estate investing

[Shane Sours]

Hi everyone,

I'm Shane and a Veteran working with a mentor through the VA's ACP program currently. I am new to real estate investing and want to break free from my 3pm-11pm job. I have a lot of construction experience and a electrician helper's license in the state of Maine. I am looking to either buy land or a tax acquired property to fix and flip for my first deal. I also am looking for private lenders for my team, if anyone knows any? I hope to talk to or run into any of you in the future. Have a nice day!

[Nate Herndon]

Welcome to BP, Shane! Love to hear that you're looking to learn more. I'm here on BP as a lending partner for investors and actually still serve part-time in the Missouri Army National Guard, myself. I don't see a lot of deals in Maine but closed a refinance of a BRRRR property in Mars Hill, ME earlier this spring. I also met some great folks out of Portland at the BP Conference in Mexico this month.

My father-in-law lives near Ellsworth and owns some short-term rentals there. We are blessed to have the chance to visit every summer!

Here are some common pitfalls I see for new investors from the private lending perspective:

• Insufficient Funds: most lenders are going to be able to lend a first-time investor somewhere around 75-80% of the purchase price of an existing property + 100% of your estimated rehab budget (or an 80/100 loan, for short). This means 20-25% for a down payment, and it has to be your money that you're using (verifiably in an account that belongs to you).

Though there are programs that lend up to 90/100 to first-time investors, those programs usually don't work in Maine due to the rural nature. A ground-up construction loan for a new investor on some vacant land would also be a no-go as you must be able to show successful exits (refinance or sale) from a few projects before that's an option.

So, we need to be able to see funds in your account that can cover the down payment, closing costs, and some reserves left over that will allow you to start your rehab.

• No entity to close in: Though an LLC/entity is not a must-have, it's a nice-to-have prior to seeking financing. Many private institutional lenders prefer or require your property to close in the name of LLC instead of your personal name.

• Understanding the rehab budget draw process: After you close on a rehab loan, your rehab budget is not handed to you at closing. Instead, it is held in an escrow account that you take draws from as you complete work. This allows you to recycle your funds over and over until the project is complete. For example, if you have a $50,000 rehab budget but only $10,000 to work from at a time, you can work through five $10,000 draws to complete the full rehab. Essentially, you have to spend your own money and complete work on the property prior to reimbursing yourself out of the escrowed rehab budget.

The draw process typically takes 5-7 days from initial request, to scheduling an inspection, and finally for the lender to wire those funds to you after your work is confirmed by the inspector.

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Hopefully these are helpful insights, and if you are interested in jumping on a call to discuss further then I'd be happy to do so. Good luck out there.

[Steve K.]

Hey Shane,

I'm also an investor in Maine, focusing on the Lewiston-area market. I host a monthly investor meetup here, so feel free to stop by sometime and meet other investors. I try to post the meetup date/times on here, but I can add you to the email list as well if you shoot me your email.

For a hard money lender I'd recommend Matt Rodrigue. He's someone that I met through the meetups and has a lending business called mr qualified https://mrqualified.com/.