Can Anyone Help?
I am a realtor and specialize in working with rehabbers. I know property values quite well and have made lots and lots of money for my clients. Last one, client bought for $70K (I made $2100) he put $25K into it sold it, he just sold it FSBO for $189,900 first day sign went up.
I'm happy for him but realize I'm missing the boat by not doing these projects for myself. I'm cash poor (all my money tied up in another business I own). I thought I had found the solution for funding. Received info from a man that represents 4500 investors who will give money for the purchase, rehab money and closing costs. Info was titled, Buy fixer uppers with no credit, no qualifying, no loans to repay.
In exchange they get their initial investment plus 3% per month until property sold, once rehabbing completed, clock starts ticking. I got the info on Friday, called and email Friday, Saturday and Sunday!
I was so excited that I spent my weekend finding potential projects. I found 3 awesome opportunities that won't last long. Monday I was finally able to talk to the man. Now it appears that it takes 2 weeks after you submit plan, contractor itemizations etc., etc., before they can even give you an answer! Where I live the market is so hot with rehabbers that most of the really great deals get snatched up the first day. I can't wait 2 weeks to get an answer.. Typically when we write purchase agreements we have to close in 30 days and give a minimum of $1000 ernest deposit. I also learned that in addition to paying the investor the man that sent me the info also wants 10% of the net transaction!
Do any of you know a program like this or have access to investors that I can use to get started? I don't have a problem paying a cash partner a great return on his money if he brings all the cash needed to close and rehab. I have enough confidence in my ability to find projects, quickly rehab them and sell them quickly. I have an experienced rehab crew all lined up that I can pay $10 per hr. Since I have access to the MLS I can find lots of great opportunities. I also have a degree in interior design and know how to make a house look gorgeous and expensive for very little money. I have everything lined up but the money!
AsI mentioned all my money is tied up in a business I started 2 years ago for my daughter and son-in-law. We're just to the break even point now.
The perfect scenario would be to have an investor line of credit so that when I find these great deals I can put them under contract right away. If you're a rehabber you know all the great deals go very, very quickly.
There's my story. Can any help?
Thanks a bunch!
3% per month!
That is well over 36% a year in interest once you add in the compounding (unless you have to pay the 3% yourself every month and not add it to the loan balance, and then good luck!)
This sounds like usury and is quite illegal. Watch out.
People will charge what people will pay.
You should apply for an unsecured line of credit. Or get a rehab loan at the time of purchase.
Lori
[addsig]
People will charge what people will pay, but the government will come after people that charge too high an interest rate...even if they are loaning it to somebody willing to pay it.
Granted what is considered excess interest varies from state to state, but I'm pretty sure 36% would be considered excessive in every state.[ Edited by kevinlangley on Date 05/11/2004 ]
Just as a thought, and I'm sure you would know about them, since you're a realtor, but have you looked at HML? Those guys eat up the kinds of deals you're talking about... The company you were talking too sounds like a bunch of ripoffs, to me. How's your credit? If you're in pretty good shape, you oughta be able to line something up with a local bank there. Go to you local REIA meetings, and see if you can find a mortgage broker that's got some good programs that you can get preapproved for, you start flashing pre-approval letters around, you can make deals WAY quick.
Go to ebay and type in "hard money" in the search. Buy the e book for around $15.00. It has a great deal of info on finding hard money lenders.
Good luck
The thing I have done is do hard money to close escrow, and then flip into construction or easier money
Hard money if very expensive here in N. Cal.
Last quote I got was:
Loan Amount : 80% LTW with maximum of $400,000 – 1st Trust Deed
Loan Fee : $ 20,000 up front
Term 6 Months
Interest Rate 12%
6 month balloon, but 5 points, ouch.
If I could get the points down, that's not bad for 4-6wks until other financing in place.
FYI, In CA if they have they proper license, then can basically charge what they want.