All Forum Posts by: Mike Burkett

@Matt C. Matt, last year we were regularly wholesaling houses to investors at 80%-82% ARV less construction cost all over the DFW area. There are a lot of investors buying houses from wholesalers and the wholesalers know it. You will need to go direct to the seller to get something below that. The problem there is all those sellers are being approached by a lot of buyers so the sellers are pretty savvy to the price they can get for their homes. Also, if you go that route, don't forget you will need to add your marketing costs to each house you put under contract. And that is probably not a small amount.

Based on your income you are going to be limited to a purchase price of $200,000 or less.  There are plenty of low down payment loan programs available where you don't need to bring 20% down.  

1) Rate, fees, and loan amount

2) Do you charge interest on undrawn construction funds?

3) How quickly can you close?

There are several more you should ask, but I was limited to 3

@Minh Le I know of a lender that only uses a desk top valuation. No appraisal. 70% ARV with 10% down payment. PM me if you would like additional details.

@Chris Papa if your plan is to flip properties, most hard money lenders in Texas will require that the properties be purchased in an entity. You will also personally guarantee the loans. There is a one time set up fee of $350 (approximately) to form an LLC in Texas if you do it on your own. If you are buying rental properties and you can qualify for conventional lending, Fannie and Freddie will require the properties to be in your individual name.

@Ben N. Ben, a word of caution on series LLCs. A lot of lenders do not like them. If your property is held in a series LLC they may not lend you money on that property.

@Hunter Peterson We have been lending for flips and rentals in this market for a very long time and we are still very bullish.

Great thread question!  I've been a lender to real estate investors for 20 years.  First working for investment banks, then commercial banks, and now as a lender to single family investors.  If you want to borrow money from a commercial bank, you better get used to the "whole relationship" idea.  They want your car loan, your house loan, your credit cards and particularly they want your deposits.  It is the way they are trained.  Also, many banks don't like real estate investors.  If you are ok with the relationship idea, go find a small bank that does like investors.  If your income is spotty or your credit history is marginal or your assets are thin, you will have trouble with almost every bank.  

If you are just looking for a loan, there are specialty lenders for the real estate investor that want to start a lending relationship with you that are not nearly as picky and demanding as a bank.  

$50,000 is the minimum loan amount.  If the bank required you to put 20% down, you would need a minimum purchase price of $62,500.  

Dorian is that first deal going to be a flip or a rental?  Lenders for rental properties are going to want cash equity in front of them, not additional debt.  If it is a flip, you can probably get away with that strategy with a hard money lender.  Not all will allow that some will want to see that cash in your bank account for at least 2 months.  A general rule for me is make sure you have 20% of the project cost (purchase price + rehab) in the bank before you close on the purchase.  That should give you a safe cash cushion throughout the project.   I've helped many investors with your same problem over last couple of years.  Good luck.