All Forum Posts by: Account Closed

Sounds like you have alot of profit baked in. That being said a lender in the second position would likely want to see collateral outside of the deal as well to get more comfortable with your lack of experience. We understand there is a first time for everything, but most private money does not want people experimenting with their hard-earned money! The points/interest and collateral would reflect that. Best of luck with your project! 

My first deal was at 20 years old, I invested in a multifamily real estate sydication. I got really lucky, and when I went full cycle I made 80% in a 2 year period! not bad! 

 I do this as well. For the best passive-to-return ratio I would also do MF syndication + private lending. Gives you time to get your cashflow up in a different business 

@Joe Jung Private lenders usually want to keep things under 12 months to keep their profits as high as possible. Sounds like if you got cash from HELOC, you don't need private lender and can go the conventional route

I second what @Ryan Miller said. Tho there are due diligence fees, these are tact on usually out of the "net funding" of the deal or if you back out at the last minute and the lender already did all the work of underwriting the deal. 

Depends what you are trying to do, but if you work with a private lender and you have a great track record and a good deal these shorter-term deals can often times be preferred. Just keep in mind fees for shorter deals are more expensive (not because they are higher, but because they are all in a shorter period) 

Private lenders dont really care where you are getting the down payment. I say don't really because they are just measuring your viability to pay them back. That borrowed down payment may or may not affect their decision depending on other things like your track record, how this particular deal looks etc. It's up to you to sort out what happens with profits/share of the deal. I would say as a general rule of thumb if you're getting the downpayment with OTM if you have sufficient collateral outside of the property it self that is a good sign to a lender. 

Sell and move on! not every deal is going to be a winner much less your first. The experience you gained will speak volumes in the future. 

I would also make sure you know what private lenders are looking for. Private lenders don't like risk, and are trying to mitigate the risky parts of a flip as much as possible. If you understand where they are looking for risk, you can look for risk there as well and evaluate if you are comfortable with that risk on a deal-to-deal basis. 

A few things that lenders will ask to gauge this risk:

Why do you like the deal?

Summary of scope of work? is it a large effort? Permits? 

Expected duration of the deal check to check and why? The longer it takes the more time todays market conditions have to shift.

Who is managing it? Are you? Have you ever dealt with GC's before? 

Talk about comps in the neighborhood? Are there real comps to point to? 

Purchase price what’s the deal? Under market? At market? 

Where is value being created? How do the rehab/improvements make the value go up? 

Private lending is a good option! you can earn double digit returns while being in the safest part of the capital stack