How to approach banks for purchase & rehab loan for brrrr

Question

Hi all, I'm currently researching and analyzing fixers to kickstart my first brrrr and planning to talk to local banks/credit unions about getting a loan for the purchase and rehab costs. As a new investor, I guess I'm just kind of anxious about how to approach them, what to ask, that kind of stuff. So, any advice will be greatly appreciated. Also, any local banks/credit unions in the Dallas area you can recommend that are investor-friendly? Thanks!

Ian Walsh · Answer

Private lenders are usually the best bet.  Some local banks might also be a decent fit but banks are normally in the business of writing consumer loans .

Brenda C. · Answer

Hi Steve,

I have used Pamela Terry at First Financial for commercial loans to bundle properties. She is great and very investor friendly.  I believe she has a loan that allows you to fund the deal and repairs up to 80% of the ARV.  Another great investor friendly lender is Wrayanne Wallace at Cardinal Finance.  One option for private money is the Quest Trust company events.  They do Self Directed IRAs and a lot people are looking to invest in real estate using their IRAs.  That way you could do an all cash offer (which definitely helps right now in this crazy market) and then finance the deal once you finish the rehab and rent out the property.  I haven’t used Elk Funding but know the owner and they consider themselves “soft money” since they charge less than hard money lenders.

In terms of what to ask let them know your plan and write up a short bio about yourself and your plan.  Prepare a financial statement and know your finances, they are going to want to see everything.  Ask them about their experience working with investors and what programs they have that meet your needs.  If they don’t have anything ask if they have a recommendation for someone who might. Ask about rates, points/fees, and how long they are taking to close right now. And get pre-approved if you can so you know how much you can borrow based on your income and credit.  If you haven’t already start attending some local Meetups, there are a lot of them and you will get an opportunity network in person, find out the best banks, private money lenders,  contractors, etc.   Good luck on your first BRRRR!

Demetris Adekanmbi · Answer

Hi Steve,

I know that Prosperity bank does buy and holds and   I also have another lender in my network from First United Bank- they consider buy and holds as well as flips.

Steve Lee · Answer

@Kevin Hill Thanks. For sure cashflow is the goal. Talking with multiple credit unions and some lenders right now.

Kevin Hill · Answer

@Steve Lee

There are private lenders that will make it much easier for you to scale your BRRRR strategy as they provide both construction loans and perm financing. They can make sure you leave the least amount of equity in the deal (while still cash flowing once stabilized) if that’s your goal.

Steve Lee · Answer

@Brenda C. @Sarah Shellam First time hearing about SDIRAs. Seems like a great idea for getting funding for sure. Kinda blows my mind that there are so many creative ways of finding sources of funding and grow my business while helping other investors multiply their wealth as well. For sure win-win. Sending you a DM about those classes, Sarah. Thanks!

Steve Lee · Answer

@Brenda C. Awesome. Thanks for the suggestions and tips! Will definitely give them a call.

Rebecca Parker · Answer

I agree, private money from SDIRAs can be such a good option, too. There are hundreds of thousands of dollars sitting in retirement accounts that can be used for RE investing; all it takes is the right conversation with an account holder, and those events are the best places to meet people. The great benefit of private money is that all the terms can truly be negotiated on between the borrower and the lender, so there's a lot more flexibility and ability to create win-win scenarios for both parties. I also know of some classes that are all about top tips for borrowing and lending with private money! Happy to share.

Steve Lee · Answer

@Demetris Adekanmbi @Ian Walsh Thanks for the suggestions. Building a list of lenders to contact.

How to approach banks for purchase & rehab loan for brrrr

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