Roadmap to raise 100% financing for a rehab/refi

Thanks for the enlighting post on financing and the information on approaching small banks.I think at this point in time many peole agree that large banks are not the average person's friend.People should also take a look at your your local credit unions for obtaining finacing. Local credit union are very personable and easy to eastablish relations with the bank officers.

Thanks for the tips.
Money and buyers wre two of my primary obstacles.
Properties I can find beyond my dreams.

Thanks for your tips. I've written my first 3 offers, 2 on REO's I'll do double closes and 1 Seller Financed. I'm tracking my offers and hope to be in line with Matt's 25:1 ratio.
I'll keep you posted.

All comments were very helpful, and it showed me how to do a deal that I am working on. Integrity is no. 1. Write out the plan and sign it as an agreement. Calculate the interest on the loan. etc...I just began this program, I am already in the middle of deals that I dont want to blow. It is like I have to skip pages to get to what I need right now, these forums really help. Thanks again Chillermiller

If you really want to know about how to raise private money in a manner that's SEC compliant, I would recommend you look into Patrick Riddle's program called Private Money Blueprint. He teaches you how to not only go online and access the public records in your local courthouse that reveals the private lenders that are currently loaning money in your area, so you can compile a private lender list, but also how to approach and convert those private lenders over to doing business with you in a SEC compliant manner. I've found the training to be well worth the $97 it costs to join. Here's the link if you want to check it out. I am not an affiliate and receive no compensation whatsoever for providing this link:

http://www.PrivateMoneyOnDemand.com

I found these tips very helpful and have been able to locate small local banks. The obstacle is being able to qualify for the loan. Most banks are requesting a 660 FICO score or higher and I am not quite there yet. Is it possible to get the loan for a rehab/purchase with this in mind? Any information you have would be helpful. Thanks!

-Melina

Hey I was reading about your success story and wanted to congratulate you on your home and credit limit etc...

My husband and I are just getting started and are seeking creative financing techniques. We are newly weds in a building stage and do not have the "excellent" credit most banks are looking for. Do you have any ideas for what we can do for a purchase? He does have an LLC it's been a long while since he used it and I don't know if he can get a loan like you did. Do banks check into the LLC information or do they just run the EIN because he has all of that. We are in contract to buy a rehab house and an extra $15K would be perfect right about now. Any information you have would be helpful. THanks!

-Melina

I have self directed IRA account with one of the financial advising company; he is investing in mutual funds. For last years, I have not lost money, but I have not made either. I am interested in using this money for RE investment purposes.

Does this anyone know any company where I can move this money to, and use it for RE investment purposes at vet reasonanle cost? Additionally any investment tips would be appreciated.

AMAL

When are we required to provide a "Private Placement Memorandum" when we raise funding for a project from other than a bank?

Nathan,

Do I have to have good credit to use these local banks for a business deal? I had a bankruptcy 1 1/2 years ago so my personal credit can't be good. I kept my car and house and have made on time house payments and double car payments. I would hope that I could be successful simply by showing them the deal is worthwhile. Maybe I'll have to form an LLC first. I wanted to wait until I made a little money before I did that. What do you think?

Kathy Vatcher

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Thank you Nathan!

Fortunately I have been able to do my deals with PM and by JV, but I will use your road map (done so nicely) to be ahead of the needs of my buyers so I can assist them with funding as needed, and of course to do more deals myself.

Thank you, Thank you.

From the Edge 2012 (I day early to shut myself in a room and work!),
and with admiration,
- Tina

A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk taken by the lender. Most hard money loans are used for projects lasting from a few months to a few years. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.

The qualifying criteria for a hard money loan varies widely by lender and loan purpose. Credit scores, income and other conventional lending criteria may be analyzed. However, most hard money lenders primarily qualify a loan amount based on the value of the real estate being collateralized. Typically, the biggest loan one can expect would be between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000 - $70,000 against it. This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

Randy Bailiff
Dean Graziosi Real Estate Investment and Life Coach

Keep the great tips coming!

It's nice for a newbie like me to get tips from someone who's already proven them to work and been "down that road". Thanks for the roadmap. Financing is definitely at the top of my priority list!

Ed

I HAVE HARD MONEY LENDERS THAT WILL LEND 100% PURCHASE AND REHAB VALUE UP TO 65% ARV. SO REMEMBER KEEP YOUR PROPERTIES UNDER THE 65% RULE AND YOUR GOLDEN. RULE OF THUMB KEEP "CASH RESERVES", MOST LENDERS REQUIRE IT. LENDERS WANT TO KNOW THAT IF THE PROPERTY DOESN'T SELL AS EXPECTED THAT IF FOR SOME UNFORESEEN REASON SOMETHING IS DAMAGED THAT YOU CAN COVER IT. THEY KEY TO BUSINESS IS USING OTHER PEOPLES MONEY AND KEEPING YOURS. SO WHAT IF YOU GOT TO PAY 15-16%, YOU ARE TAKING MINIMAL RISK AND RECEIVE HUGH REWARDS, OR AT LEAST THOSE ARE THE DEALS YOU SHOULD GO FOR.

IF ANYONE IS INTERESTED AND IN THE NEED OF FINANCING, I HAVE MANY SOURCES. I WORK IN RESIDENTIAL AS WELL AS COMMERCIAL AREA, SMALL AND MULTIMILLION DOLLAR DEALS. I CAN GET YOU QUALIFIED FOR RESIDENTIAL DEALS WITH PROOF OF FUNDS EVEN IF YOU DON'T HAVE A DEAL AT THE MOMENT. CONTACT ME FOURTHWARDGROUP@G MAIL.COM 203-293-6018, TRAVIS.

I HAVE HARD MONEY LENDERS THAT WILL LEND 100% PURCHASE AND REHAB VALUE UP TO 65% ARV. SO REMEMBER KEEP YOUR PROPERTIES UNDER THE 65% RULE AND YOUR GOLDEN. RULE OF THUMB KEEP "CASH RESERVES", MOST LENDERS REQUIRE IT. LENDERS WANT TO KNOW THAT IF THE PROPERTY DOESN'T SELL AS EXPECTED THAT IF FOR SOME UNFORESEEN REASON SOMETHING IS DAMAGED THAT YOU CAN COVER IT. THE KEY TO BUSINESS IS USING OTHER PEOPLES MONEY AND KEEPING YOURS. SO WHAT IF YOU GOT TO PAY 15-16%, YOU ARE TAKING MINIMAL RISK AND RECEIVE HUGH REWARDS, OR AT LEAST THOSE ARE THE DEALS YOU SHOULD GO FOR.

IF ANYONE IS INTERESTED AND IN THE NEED OF FINANCING, I HAVE MANY SOURCES. I WORK IN RESIDENTIAL AS WELL AS COMMERCIAL AREA, SMALL AND MULTIMILLION DOLLAR DEALS. I CAN GET YOU QUALIFIED FOR RESIDENTIAL DEALS WITH PROOF OF FUNDS EVEN IF YOU DON'T HAVE A DEAL AT THE MOMENT. CONTACT ME FOURTHWARDGROUP@G MAIL.COM 203-293-6018, TRAVIS.

I have no credit and no money how do i do this I am in california

Thanks for taking the time out to share this information. I'm in Austin Texas. Like greg murphy I buy home subject to and now thinking about other opption which will need money short term as well. This is why I come to Dean's site because u just dont know what little treasure u will find on this site. Thanks again. ED

I realy enjoyed your tips and I wish you if you can keep puting tips that road will be great. Thank youagain.
Ramses

and the strategy I came up with is now taught at boots on the ground training. The key is self directed IRAs or 401k s( If you have an old job with regular 401K, you can convert it to self directed by sending it to another company (check out Guidant or Equity Trust (which does have some drawbacks over Guidant IMHO) Now, with a self directed IRA, you cannot use the money for yourself or your business, but you can buy real estate within your self directed IRA... but there's another caveat ... you can also do non recourse loans... secured or unsecured... through your self directed IRA or 401K plan... to people you aren't related to or that fall outside the prohibited people of the self directed programs...

And this is what is now taught in the boots on the ground now and was a turning point in my investing. My creative outside of the box thinking made deals possible I otherwise couldn't haev done. If you find another real estate investor that needs funds as well, and you both have the same amount of money in an old 401K plan, you can convert both convert them to self directed IRAs. I did this, and found another investor who needed $45K the same as me. Can you see where I'm going with this?

Zion Properties wrote:

If you find another real estate investor that needs funds as well, and you both have the same amount of money in an old 401K plan, you can convert both convert them to self directed IRAs. I did this, and found another investor who needed $45K the same as me. Can you see where I'm going with this?

I'd be cautious that this collusion between multiple investors to "loan to each other" from their respective SDIRAs is absolutely on the IRS' radar screen as a violation of IRA rules, and there are examples of these schemes being detected by them with the involved parties subjected to stiff fines and penalties. So this is nothing new, and one should proceed with all due caution.

I WOULD LIKE MORE INFORMATION ON FINDING A PRIVATE LENDER IN MY AREA. I AM LOOKING FOR A PRIVATE LENDER AND WOULD APPRECIATE ANYONE'S SUGGESTIONS ON HOW TO FIND ONE AND DRAW UP A PROPER CONTRACT. I AM NEW AND GETTING STARTED IS TAKING A LITTLE TIME, BUT WOULD LIKE TO HAVE THE CASH TO SECURE A DEAL WHEN ONE PRESENTS ITSELF. I HAVE ATTEMPTED A LOAN AT MY CREDIT UNION AND MY FICO IS TOO LOW AT THIS TIME. ANY SUGGESTIONS, AGAIN, WOULD BE HELPFUL. DENISE

Is there a way or resource to use to find other investors that are interested in private lending? I'm looking for one.

Thanks!

God bless you now I have more options.

I like Nathan's ideas and here are some others. If you buy the property right, 100% financing isn't too hard to find. Use a hard money lender that will loan 70% of the ARV. If you put a property into contract for 70% of the ARV, minus the rehab costs, then a loan at 70% of the ARV with cover the full purchase price plus the rehab costs. The interest rate will be high, but the key is the complete the rehab quickly and then sell the property for a profit or refinance the property with a conventional lender similar to the type Nathan talks about at a lower interest rate and hold the property for income cash flow. In the later scenario, the important factor is how much rent can be collected. When you leverage to buy rental property with no money down and have a positive cash flow while paying off the mortgage you will eventual have free and clear properties with a great income stream without using any of your own money.

Wow. this is great information that shows once again the power of building great relationships. Small community banks and possibly local credit unions. Nathan, | have had my hands on a financial calculator at one of the office supply stores, but have never bought one. My smart phone does a lot of great calculations and even gives me a choice of mortgage calculator apps, but you have convinced me to buy one. I saw a video of EDGE 2009. Now it makes even more sense.Thank you.

Be your very best always-Judy Williamson

What you focus on is where your energy goes-Kristin

Patrick

Thanks for the article, Tip #1...The manner in which you have written this is clear and easy to follow. Thank you for that and keep 'em coming...

Thanks for the tips Nathan!
Here we are years later and I still found this info very helpful. I am currently working a deal where I need to fund the rehab and looking for some help in how to raise the funds, preferably with private money that doesn't care about my income and credit.

Can someone clarify for me please... What is "Hard Money"? why is it called "Hard"? and whats the difference between a Hard money lender and private money lender?
thanks,