How do you apply for construction loans with little money?

[Jourdan Mercer]

How do you guys apply for construction loans on BRRRR properties if you're limited on funds?

I have about $30,000 for reserves and can only get bank approved for upto about $300,000. Does anyone have any suggestions on how I should go about getting a BRRRR property and applying for a construction loan?

I'm a licensed builder, I live in Massachusetts and would like to do as much of the work myself as I can reasonably do.

[Andrew Postell]

@Jourdan Mercer ok, this piece is CRITICAL to your success.  

Many investors use "Hard Money Lenders" (HML's) for most of their acquisitions. The reason we use HMLs is because they can lend us up to a certain amount with NO DOWNPAYMENT REQUIREMENT. For example, if you are qualified with a HML for up to 75% of the After Repair Value (ARV) that would mean you could BUY and REHAB a property as long as you purchased it and fit in all the rehab into 75% of the ARV.  That is easier said that done of course but $30,000 is PLENTY of money to purchase your first property as long as you are working with the proper lender.  And this is where having the proper lender really makes a difference.

Some HMLs will NOT lend 75% of the ARV. Some will have this strange formula of 100% purchase price and 80% of the rehab, not to exceed blah, blah, blah of the ARV. Those types of lenders WILL require a downpayment.  So make sure you are working with HMLs that will allow the full amount of 75%.

Also, sometimes a HML might say something like....well, since this is your first deal, we'll limit you to 70%. That might be fine as long as they will lend you 75% on your next property.

And since you are a licensed builder you should be able to do the work yourself.  That is, as long as you have the proper insurance and work history...which I would imagine you do.

I hope all of that makes sense.