Arranging Financing In Advance
I have rehabbed 2 homes so far. Now I'm so deep in debt that I'm pushing the envelope for lenders. I have a 692, 692 and 713 for credit scores.
I haven't sold the homes I've rehabbed as I need the income stream to have a decent debt to income ratio.
I can find and rehab all the houses I can get money for at below market values. However, it's frustrating to find these houses then spend time chasing financing only to see the house picked up by someone else before you can get everything lined up.
How do these guys with the "I BUY HOUSES" signs do it?
I've figured out (too late???) now how to do a rehab much less expensively than I did with the first 2.
Any advice from you experienced rehabbers or lenders?
R/igreen
Welcome,
If you have read manyu of my posts I have advocated reading Kevin C Myers book on rehab, also the one by Fixer J.
This will save time and money in the long run. It will also hepl you spot a "good deal".
If you are looking for deals and need financing then I would hook up with a hard money lender for a rehab and flip or rehab and then refi, or a partner that is looking for a good return on his money.
I helped bring some people together a few months ago. The "Lady" 50+ was attending RE meetings but not acting on anything. She has 110K in a HELOC. The investor had a lot of experience buyng and selling properties but was running into a glass ceiling as to available funds and could only do 1 deal at a time.
I brought them together, she gets 12% and 2 points ( I think it is+-$600 posititve cash flow for her) , the investor also shows her how things work and walks her through the deal with him.
Then there is my personal favorite concept. If the place is in sad shape, a Sub To with a quick refinance after rehab, allowing me to pay more to the seller for the generous terms..
The bottom line is education and then activity not the other way around.
I learned the hard way, not something I would suggest to others...
[addsig]
If you are making it on your income then have your lenders qualify you for a no ratio loan. Your scores are high enough for most lenders who have those programs.
Thanks for the advice. I'll get started reading and will definitely ask about no ratio loans. You folks are a great help! I know I'll do well if I'll just listen and learn!!!!
Here's an idea.
What I did on my last house was partner up with my brother. I found a killer deal on run down property in a very exclusive area, but couldn't swing the loan myself. Purchase price was $200,000 (in a area of $500,000 to $1,000,000 + homes) and it needed about $70,000 in rehab. He and his wife have very good steady incomes and a plump HELOC with interest only payments. We wrote up a joint venture agreement for this property. It stated he would buy the house in his name and put up all the rehab money and expenses. I would be responsible for managing the rehab and selling it. We would split the back end profit 50/50.
He used his HELOC for the down money and for all the payments / expenses. He was able to get a no interest "vacation home" loan for 30 years with 10% down. He also obtained a "home improvement" card with a $20,000 line from Homer Depot with no payment / no interest for 6 months and put my wife and I on the card as users. Terms were Initial purchase $2000 and minimum purchase on the card was $250 thereafter. I bought $500 to $1000 gift cards with the line so I could make little or big purchases.
The actual "out of pocket" payment per month for everything was around $250 / month. After a 6 month rehab, we sold the home (no realtor) for $410,000. We pocketed about $60,000 each. Sure, I wish I could've made ALL the money, but I couldn't have done it without him.