Money Lending Limit or for First Timers

[Cameron Fowler]

I was just wondering if trying to fund 1.5 million dollars is possible. I think the best route to take is the private money route but are there any other ways to fund that would work better? What are the best ways to fund with realistically no money but a high credit score? If you were finishing up college which route would you take? Feel free to connect

[Randall Alan]

Quote from @Cameron Fowler:

I was just wondering if trying to fund 1.5 million dollars is possible. I think the best route to take is the private money route but are there any other ways to fund that would work better? What are the best ways to fund with realistically no money but a high credit score? If you were finishing up college which route would you take? Feel free to connect

Interesting question…

Think about lending like hiring someone for a job… do you hire the guy with no experience?  No skin in the game?  What if it’s a really high paying job… a million dollar job…  you want someone  who has lots of experience… has done the job for years and a demonstrated track record of getting the job done.  

Lenders are going to see your deal the same way…  they would want to see previous smaller deals done… successfully, with loans repaid… with a high credit score… with cash reserves of their own… and no one is ever going to lend all the money… you have to have money in the game… that’s why 20-25% is the usual amount down you have to bring.  

Your best bet is to bring in a strong partner that checks those boxes that you don’t.  Maybe you become a more minor player in the deal.  Just be glad to be a part of it at all… because otherwise you would never be a part of it in the first place otherwise.  Not trying to be mean whatsoever.. I’ve got 25 properties that we own… 18 outright.  I’ve been there, played the game… and with that much background I could probably pull off your deal because I’ve got enough equity behind me that lenders would see I have significant assets to back such a deal.  But they would still make me lien up those properties to back such a loan.  A lender isn’t going to be the only one holding the bag… they are going to secure their position. Ask yourself how you are going to check those boxes.  It’s awesome to be bold, to think big… but your lack of experience also shows right through.   Straight up a $1.5mm deal is WAY out of any beginner’s league.  Presuming your deal is for rentals, or even a flip… do you have the funds to handle the unexpected?  New roof?  Several new A/C’s in the same month… several renters not paying their rent?  New septic system? How about a fire in a unit? How about a $30,000 cost overrun on a flip?    How about all of those within several months of each other? It’s all happened to us… albeit across about a year.  The point is, start small, build your experience, gather funds, move towards bigger deals. 

all the best!

Randy