Lenders And Private Money Confuse Me
Hi, i have a prop. i am interested in. actually i have a post about it. The owner is in pre-forclosure and wants a little cash for their house. the thing is this. they owe 108k + Backpayments and fee's = about 118k. I can probably get the prop for a total of 125k. the appraisal on the street card reads 173k and is old. prop worth 200 or more. i called a "private lender" but doesnt seem to "private" to me as i have to pay for loan origination fees and whatnot. he tells me they do 100% financing and then later in the convo he starts talking about how i should inflate the price and make a promisory note for the seller with a small interest rate that i pay them every month. . so he tells me it will be a 90% loan with a 15k promisory note. (so i dont have to come up with anytihng out of pocket) honestly im just confused now. i dont see why he just cant lend me 125k and charge me like 2-3 point upfront or in the end. what is so hard about that. i want to do a quick flip (less than 2 months) can anybody help me? does anybody know af any good "private lenders" or soemthing that i could work with to make this work? thanks a lot, Ryan
any takers?
Seems like you have grabbed a tiger by the tail and aren't quite sure what to do about it....
Your busines plan/model should have addressed the need for capital....
Treat real estate acquisition more like a business. Without an articulated business plan and well defined exit strategy... you'll keep running into (easily avoidable) obstacles and have to reinvent the wheel every time....
That's OK in some firelds... but the distressed real estate industry is time sensitive and requires proactivity...
Find yourself about half a dozen lenders... learn their criteria, and, to coin a phrase, "don't put all your eggs in one basket..."
[addsig]
Private lenders charge what they want to charge up to what the market will support or to what the state limits (if any) allow.
Be careful about inflating anything. At the same time you might not have really understood correctly what was being suggested so it would not be fair to say the lender is suggesting fraud.
Assume that the costs of financing a deal such as this are just part of the expenses and factor them into the equation. If you are still making a good profit be slightly less concerned about what you have to pay. When you collect the profits you will be a happier then leaving the deal for someone else and thinking you saved yourself some fees.
I did not follow exactly what you are saying about the 2nd. I do deals like this one so it is just I am not sure of the facts in this specific example. I am not sure that it is important to clarify here but you do need to really understand yourself before setting something up. Things can blow up and you want the deal to work.
John
[addsig]
yes thanks, it sounds good i would hate to lose this one. it not not that i am uneducated about all of this, its just that i have never done it and i have never used a private lender before. experience is better than knowledge. thanks, Ryan
Hard money is also an option here. Are you familiar with that?