All Forum Posts by: Rae Hoffman

@Roman M. Sorry about that. The whole private lending thing (as far as using it to fund my own flips) is completely foreign to me. So some of my questions are showcasing my own confusion. ;-)

Maybe a better post would have been to simply ask, "how does the whole using private lenders to fund flips work?" LOL

Hey, y'all - I'm wondering if anyone could give me an idea of what the options are when it comes to private money lenders. I have a few people who are willing to become PMLs. My questions surround the setup surrounding all of this.

*Note - I am in Texas if that matters.

From what I've been able to gather with talking to other investors, several I know have their's set up to run it as no points, 12% annualized interest, paid at closing. Some say 10%. Anyone know the average?

Some questions I'd love some advice or opinions on -

1. I've seen some advise you'll get more lenders interested if you offer a minimum three months on their return (houses in our price range move fast here). Thoughts?

2. The lenders would be in for a minimum of 100K a piece, but where we would be flipping, that's only two-thirds of a house before repairs. Most of the setups I'm seeing put the lender in 1st position on the note to secure the investment - considering our flips would almost always take two lenders if we're working with folks loaning the 100K minimum - how does that work? I assume two people can't be in the first position on the loan.

3. Let's say a house with two private lenders (or a fund) loses money on the deal - how does that work concerning how people are paid back when more than one lender are involved?

4. I've seen mentions of a private lending fund here on the forums. How do private lending funds work typically?

5. What if you end up getting 500K in a lending fund but only end up using 200K of it in a given month for whatever reason?

5. Let's say a house with a lending fund loses money on the deal - how does that work concerning how people are paid back who have money in the fund?

Make no mistake; a lawyer would be setting all of this up for us - before we took a single dime - but I'd like to know more about the best way to get this all setup and how it all works before hitting one up. 

We'll be doing about a house a month under our own funds, but obviously, we'd love to do more.

We were a little surprised that when we made a very minor mention, we'd soon be looking for lenders with 100K minimum to invest that we were hit up by two people fairly quickly. And we've yet to actively look for them - so I need to get this figured out, and soon.

Thanks for any advice, tips or information about pitfalls to watch out for!

@Tristan S. good to know! I think we're doing another BIG meetup in May, but @Sean Dolan would know better about that.

If you want to send me a message and let me know your parameters, I'll keep an ear out. Ours are fairly specific.

Also forgot to mention that I keep a pretty active eye on school board related stuff with regard to zoning - as well as demographics, population estimates, expected growth areas and new housing projections provided by the board - which is helpful sometimes when it comes to negotiating deals and evaluating them - especially since we're primarily looking to hold.

@Tristan S. 

A few ways.

We’re friendly with a few agents.

I’m on top of standard listings and price reductions - and am a pretty good negotiator, LOL.

I also co-own an agency that does the lead generation marketing for Houston House Buyers here in Houston (as well as for other clients in multiple other cities - we just don’t farm in those other cities). We’re strict on not competing with our clients – even if it's for ourselves – so HHB will occasionally toss something our way that meets our pretty specific criteria as well.

Keep in mind though – as I said in my initial post, we’re mainly buy and hold right now. We’re not looking to produce cash flow from our rentals in the immediate term. We make plenty of money through our agency and can afford to pull a conventional loan(s) every month with the standard 20% down on a 15-year term. We’re looking to buy, make move in ready (if not already), and be able to lease it at enough to cover the all-in payments and have someone else pay off the asset. 

Of course, the deeper down the funnel I get, the better - regardless of buying and holding – or flipping. No one says no to saving money on purchase price LOL. We’re also planning to do a few flips, so the wholesaling leads will become more important in that scenario.

@Sean Dolan - I'm sorry, do I know you? ;-)

Hey y'all - I'm new here (first post), but already have a few properties (buy & hold) & we're moving fast (despite closing on two in March, we already have renters for one and are moving now to find a third to get under contract before the end of March). Thus far, we're doing great on marketing and finding good deals, but I'd like to test out the wholesaling sales funnel (always want to try every avenue I can).

Everyone keeps telling me to sign up for wholesale lists, but, internet searches turn up a ton of shady people simply looking to grab your email and people without deals even remotely close to what I'm looking for (50 miles away, etc.).

I strictly invest in Katy. I'm fine if the wholesale deals they get in Katy are few and far between since we have several other productive marketing avenues, but I'd like to find a few reputable wholesalers to work with and get tossed on their lists for homes that meet my criteria.

The whole meet and greet in person thing to explain the process annoys me because it means driving into Houston to hear something they could tell me over the phone, but if that's what I have to do, I will. Just looking to find some reputable companies - who, if they require a meet and greet - aren't going to then waste my time with deals made to *look* like deals with inflated ARVs ( I get everyone inflates them - I'm talking really inflates them).

If everyone wants to hold specific wholesalers close to the vest, I totally get it. But if you could maybe provide some tips to be able to spot wholesalers that are a waste of time, that would be good too.

Any help appreciated. Thanks!