Financing Help
First let me say I am new to the site and think its fantastic. I am 27 in the Chicago area. I have a couple businesses, one in accounting and another in property management. I manage about 35 high-end luxury condo buildings in Chicago. I bought my first home (a townhome) at 21 and its my primary residence today.
I realize the value of real estate investment and I want to leverage my wealth to purchase several investment properties that will be managed by my PM company. I am having problems because my credit score is low (LOW 500). Even though I have solid mortgage history, no BK, no Foreclosure and no repossessions. It seems my first couple years starting my businesses took a huge toll on my credit in the form of late pays.
I figure my equity in my home to be about $60,000. My businesses appraise in the range of $300-400K each. How can I leverage these assets to secure financing for investment properties? Will a hard-money lender look at these sorts of factors when considering a loan? Can anyone recommend a good hard-money lender? Everyone I contact seems to be unresponsive. Thanks in advance for your help.
Hard money lenders look very hard at the equity in the property you are trying to purchase. After all, the property is the collateral for the loan you want. They are unresponsive anytime you lead with your personal story and/or your poor credit score. Talk to them after you locate and negotiate a potential purchase.
Be prepared to pay up to 5 points, and up to 16% interest to the hard money lender. I have sold dozens of properties to people that used hard money lenders, and my calculations indicate that the hard money lenders bite off up to 35% of the net profits on some deals.
In order to play this REI game well and get interest rates in the 7% range, you must raise your credit score to the 700+ range, which would indicate to other players that you DO pay your bills and are a credible person. In other words, if you say you will pay... you WILL pay as agreed.
[ Edited by bargain76 on Date 03/14/2005 ]