Probably A Simple Question For All You
I would like to start in Real Eatate but i have a question if anyone can answer, I will appreciate. I bought my own house and I am paying the mortgage now do you think it will be hard for me to get hard money to start investing in single family or if there is a different way to get money for investment. Thank you very much
Hi melendew,
Getting hard money is generally based on the equity spread in a property. There are some hard money lenders that may charge you less fees if you are more experienced and have really good credit. The equity spread generally needs to be between 65-80% of the value.
Another option is to find friends, associates, fellow church members, etc who have liquid cash (or access to large lines of credit), that they will loan you short or long term. If you keep a couple of these people in your back pocket, you will find that it is absolutely the best way to go!
Best of Success!
BAMZ
[addsig]
notice that this is www.theCREATIVEinvestor.com!
You now have a mortgage and your ratios have shifted a bit. Big deal.
Hard Money Lenders care about the PROPERTY that you're borrowing against more than anything. They'll give you 65% LTV or so. They don't care about your home. Many don't care about your credit, income, and many other things.
You can still buy sub. to, on LO's, flip contracts, birddog, wholesale, etc......
no problem.
Quote:
On 2003-11-04 11:36, melendew wrote:
I would like to start in Real Eatate but i have a question if anyone can answer, I will appreciate. I bought my own house and I am paying the mortgage now do you think it will be hard for me to get hard money to start investing in single family or if there is a different way to get money for investment. Thank you very much
Since you already have your own property and are currently making monthly payments on it, you probably have some equity built up in it.
You can do some conventional home equity loans or lines of credit (which, by the way, allow you to write off the interest payments on your taxes) against the equity in your own home.
There are some lenders you can find through the lenders tab and you can also check out finance companies like Beneficial- they offer express equity programs where you basically tell them what you would "Ask" for your house and they loan you the money - its a high rate, but it can work.
Once you get some money, you can check into 100% LTV (loan to value) loans. These typically require 3 to 6 months of reserves in the bank to show that you can cover any costs..
If you get the home equity loan on your first property, then sit on the money, merely show it as reserves in the bank for a 100% LTV loan, then you've basically used your own money and other peoples money to start your REI career.
If you are up for it, you can do multiple 100% LTV's using the SAME funds that you're sitting on.
Good Luck.
Quote:
On 2003-11-04 12:50, diatribe wrote:
Quote:
On 2003-11-04 11:36, melendew wrote:
I would like to start in Real Eatate but i have a question if anyone can answer, I will appreciate. I bought my own house and I am paying the mortgage now do you think it will be hard for me to get hard money to start investing in single family or if there is a different way to get money for investment. Thank you very much
Since you already have your own property and are currently making monthly payments on it, you probably have some equity built up in it.
You can do some conventional home equity loans or lines of credit (which, by the way, allow you to write off the interest payments on your taxes) against the equity in your own home.
There are some lenders you can find through the lenders tab and you can also check out finance companies like Beneficial- they offer express equity programs where you basically tell them what you would "Ask" for your house and they loan you the money - its a high rate, but it can work.
Once you get some money, you can check into 100% LTV (loan to value) loans. These typically require 3 to 6 months of reserves in the bank to show that you can cover any costs..
If you get the home equity loan on your first property, then sit on the money, merely show it as reserves in the bank for a 100% LTV loan, then you've basically used your own money and other peoples money to start your REI career.
If you are up for it, you can do multiple 100% LTV's using the SAME funds that you're sitting on.
Good Luck.
So diatribe, Forgive for rehashing this but what you're saying is to get your home equity loan, put the full amount in your bank account and use that as collateral for 100% financing for the first property?
I ask because I think we may have a perfect opportunity to do this since our mortgage has been paid in full. Can we get a home equity loan for the full market value of our home? –about 210k. Would we want to? Or should we only apply for the amount we need to get the loan on the investment property? Would we then pay the home equity loan in full after we receive the 100% LTV?
Thanks. Good thread!
pat
wow- nobody has anything to say about this?
Hi pataz,
That would be a very smart way to buy lots of properties! If you are buying properties under market value, you can use your funds to purchase, and refi out because you will already have equity in them. This is a great method to use, and each time you refi, you get your cash back!
Best of Success!
BAMZ
You have to balance the benefits of Money in the Bank and the loan on your home. Don't get the payments so high that you won't be able to qualify to buy an Investment.
If you have the ability to carry more payments, you will always look stronger if you have money in the bank.
pataz,
If you are trying to buy properties (with equities) fast and then refi your money out, that is a good strategy to use.
Instead of getting an actual mortgage on your house, you can go into smaller banks with the title to your house and ask them to set up a line of credit. Therefore, the only time you have any money out, it when you are using it to make money. See how that option works for you!
Best of Success!
BAMZ
Thanks for the replies. Was hopin you were gonna say that!
pataz,
sorry for not replying sooner, I check out multiple areas of the forum and don't get back to the same threads all the time.
If you own your home free and clear, yes, you can get a home equity loan to start to finance properties.
However, you don't really need the full market value of your home to purchase properties. I would suggest, as others did, get a loan with low monthly payments so that you don't affect your monthly cash flow.
And yes, you can use that money as "reserves" for 100% LTV or if you get say a 100,000 loan, you can possibly finance multiple properties using that money as a down payment.
Also, you don't need to have money to make money in real estate. About a month ago, I didn't really know if you could buy property with no money down but check out one of my current deals:
Seller is moving out of state and selling her last investment property. She wants what she owes on it. Balance of mortgage is about 25k or so less than appraised value.
I'll assume the mortgage or do a subject to (still a little foggy on the subject to's) and then intstantly refi to pull out the 25k to use for some improvements and down payments.
After all is said and done, I'll have about 15k sitting ion my account AND have a monthly cash flow of about 200 a month.
Not bad for casually mentioning that I invest in real estate at my sons church bowling league.
So much money, so little time.
Good Luck.
Thanks again for your replies.
Diatribe, from what you mentioned of your deal in the works, it sounds like you did good! To me the key point about your deal being, and tell me if I’m wrong, is the price you paid up front. That’s where you make all your money. Nice job!:-D
As for my situation-- ‘using home equity loan money as my down payment’ scenario, what I worry about most is loosing all or part of my equity to being sued or some other unfortunate event. In other words, if I take out a home equity loan and park that money in my bank account, it becomes fair game for anyone that wants to sue me, thus putting at risk, at the very least, some or all of the cash from the loan and at most my home in the event I cannot repay it for some reason.
Not that I’m expecting to get sued or lose my job, just being cautious. Any advice would be appreciated.
Thanks,
pataz
Start an L.L.C. or trust to protect your self. If you become unemployed, hopefully the money you are making in REI will take some financial burden off. Just more time to do more deals!!
Don't get a home equity loan, get a:
Home Equity Line of credit.
Most likely you will only want to go up to 80% of the appraisal of your home, ($200,000 home, get a $160,000 home equity line of credit) once you go over 80% you start having to pay more in interest or other stipulations, but this will vary with the lender.
With the home equity line of credit for $160,000 you only have payments when you use it. You will just write a check for up to the $160,000. Best of all you can set it up to only make the interest payments no principal. Then you just pay off the balance when you are ready.