Finding Funding (Newbie Be Gentle)
I am working on my first deal. A townhome that is being sold for 6.5k needs about 10k worth of work to make it livable. This is in a high rent area with rent being around $650-700 per month. Not trying to lender fish. I am just curios as to the best way I should attempt to get financing for this. And will I be able to finance in the repairs. I think my credit score is around 600 it got dinged a couple of years ago in a really nasty divoce.
Credit cards-cash advance, brothers, sisters, mom, dad, cousins, investors in a local RE club, hard money lenders, your own bank or credit union. Place an ad in the paper and assign your interest for a few thou.
Here is a wild one, get a close friend or relative to open a self directed IRA, have them move some funds to it, and then lend you the money as a 1st mortgage with no payments due until you fix and sell the property. They can lend you ALL the money for purchase, repairs, closing and whatever else it takes to get it done.
OR if you have an IRA let your self directed IRA buy the property and your retirement funds grow substancially. You can not enjoy any benefits now but you will when you retire.
Hello, GMJohnson
First, put an offer on the place if it's available that cheap, or it won't be when you find financing. Second, look for a mortgage broker or other lender that will do 80% on the fixed-up value of the property--they are out there. I was contacted yesterday by one who offered 6.125% money on the purchase price and the restoration, paid to you in installments as the work progresses. If you sorta "overestimate" the cost of repair, it's possible that you can walk away with cash in your pocket even before flipping the property, if that's what you are planning. Good luck!
gmjohnson,
you could also locate a private investor to fund it for you and work out a profit split with them. Good luck.
Another thought...
You may want to consider biting-the-bullet a little by finding a lender who’ll approve you even with a lower FICO score, and still give you a decent LTV. You’ll pay a higher interest rate, but you’re not talking that much money. And it will definitely help bring your score up, if you hang on to the property for awhile. Besides, if rents are that high, maintaining a positive cash shouldn't be a problem – even with a higher interest rate.
Check out the lenders listed on this site. There’s some really good ones.
Good luck! Sounds like a lot of potential for you!