Starting out and obtaining investors

[Tyler Carpenter]

Hello all, I am just starting out in this business and really dont have a lot of passive cash just yet. I am looking to take on investors to get my first place under my wing. The only positive side, is that I have a very very successful real estate mentor who is going to help me find the best deal to maximize profit, but its looking like I need to come up with $20K in money I dont have for rehabing. What are some of the easiest ways, that you all were able to use investors money? Also, what ROI did you offer to obtain more and more investors? Thanks

[Jon Holdman]

That's reasonable. The 20% is probably more than you would need, assuming they will do 100% of purchase, 100% of rehab, and some of the points and closing costs. But, they want to be sure you have some room for errors.

I would say you would be right at break even if you had a $125K note with $1700 in rent. I've been told you need a year seasoning to get a cash out refi. But go with your local advice.

The hard money will each up a chunk of change. If you buy at $80K and need another $20K for rehab, do hard money, then refi, you're looking at about $113-115 to pay off the hard money and get back what you've invested. If you refi to $125, you'll have about $10K more than you started. I'd only do that to put it right back into another deal, to pay back your starting $20K, or to build your reserves. Don't go spend that $10K. better to refi for less and have some cash flow off the property.

Try to find a REIA in Peoria, or drive into Chicago or St. Louis. I'd say Chicago since its the same state. Start meeting some people and find some local contacts.