Cash Backing

Hey Brian,

You say you will rehab for $10k and have it sold in 30 days, how did you find the buyer? Where did you get the $10k rehab figure? Do you have the workers already lined up? Where did you come up with the ARV?

Jack. the ARV came from doing comps in area with a real estate agent. Rehab figure is an estimate, however I do have the workers lined up for what is needed. Just looking for someone who wants to make 10k off of a 25K investment. The 10k will come from refinancing the equity in the home and then renting out the property. Comparable homes in market rent for 800-850. Refinancing equity of 60000 and paying back lender and rehab loan from fannie mae still allows me to pull about 15k out of the deal and generate positive cash flow. This is the plan since i am desperate for any help. Just something I thought of. Want to know if this will work and if anyone on dg website is interested in partnering up with me on the cash end of the deal.

Why not use a hard money lender, do the rehab and then a no season refi?

Michael Mangham
MD Home Acquisitions LLc

just got to that part of the book. Now i know the terminology. Im all new at this. Have a possible lead on a hard money partner from dg site. Hope this works out. However, can u send me any info about hard moneylenders that u have. I have so many questions. If the house is priced way below market will they finance the whole purchase? Also, would it not be better to try and use a dg partner instead of some company. Kind of like the saying goes, "Keep it all in the family."

Go to that REI meeting and find out who the locals are using for hard money. Be careful dealing with any "national hard money lender"' Especially ones that are recommended on this site!!! Get references from people that have actually closed deals using "their" HM. Addresses and HUD1s for proof. That will get rid of 98% of the BS on this site. Never pay any fees up front, never!
HM lenders have different policies in different areas. Some will lend up to 70% of ARV others will lend 80% of the purchase price only. It depends, so you must do your research. Again, go with who the locals are using!!!!
My HMLs only work in Denver and the surrounding areas.

I think it would be great if you found some one on here that has $25,000 in cash to do your deal. Be careful how you ask for money to fund your RE deal. There are SEC rules and regulations concerning that!

Good luck,
Michael Mangham
MD home Acquisitions LLC

sound advice. thank you very much.Appreciate the heads up. Meeting is monday and hopefully I can place an offer before Friday.

I am presently building one. I am attending a local REI meeting tonight in hopes of building list bigger.

I attended my first REI meeting last night. Went well. Got about 6 added to buyers list and met someone in my area with a buyers list of over 60. Exchanged info with him and agreed to help each other if we could to sell. However, there was one local hard money lender there. His req. were he would lend for 6 months at 65% of ARV, also wanted buyer to put 20% of purchase price down and have a credit score of 600 or better. From what I read in Dean's books I thought hard money lenders looked at the deal only not credit scores. Can anyone tell me if im right? My credit score is low and if this is norm than I need to proceed to other avenues. Possibly wholesale.

Good step attending the REI meeting. I would call those buyers and also the person you met and ask for other HM lender referrals. You might call the president of the REI group as well. Let him know you enjoyed the meeting and then ask for referrals. They do vary in what/how they will lend. Credit score should not be an issue, but they have the "right" to look at whatever they want. It's "legal usury" as one of my local HML's says. There are some that will look at a deal and if its good enough, not require anything down and defer payments. It just all depends on the deal, their needs, and your situation. No rules here. Maybe you can partner up with the person you met who has more experience to add "credibility" to your deal.

Thanks for the ideas. I have found 2 more HML and they just look at the deal. they will fully fund the deal and the rehab 100% if deal is good enough. I have one question for anybody. If I do a deal using a HML and lets say everything gets done just right, will I be able to refinance through a broker with my credit score being so low or will I automatically have to flip it. This is not a problem as I have cash buyers now and will do only a really good deal. Now that I know I can finance the deal I am really excited and anxious. Also, what about private lenders? Has anyone done a deal with one?

If you have cash buyers you do not need hard money. Just double close the deal. Use transactional funds, sell the LLC or trust, whatever your strategy is.
You use hard money when you take possession of the property, do the rehab and flip or refi and hold. In order to refi your credit and income must qualify. Sounds like you are best off wholesaling for now.
TRUE private money is the BEST way to finance a deal.

Michael Mangham
MD Home Acquisitions LLC

Find an equity partner to put up the cash. Sell him half interest in the house for $40,000. This will take care of acquisition and rehab costs. Split rent 50-50. Partners rent of $400/mo will yield $4800/yr less 30% for expenses nets $3360 yielding an 8.4% cash on cash return. Set the duration of the partnership based on the value of the house, that is, agree to sell the house and dissolve the partnership when the value of the house reaches, let's say, $120,000, or what ever you agree on. Much simpler than hard money lenders, refi's, credit concerns. Run the following ad...

8% Return Safely
Do you have cash sitting in the bank and need help? $40,000 buys half interest in $80,000 property yielding 8% cash on cash return safely. Call for info.

thats a new one. Never heard of that. Equity partner. Sounds good. Thanks. I am learning so much.

The equity partner/participation model was popular in the mid 1980's when there were double digit interest rates. There's a bunch on the internet about it...google "Equity share". The deal presented above is tailor made for an equity share.

does anybody know howto do a double lease for purchase? I have a house that i can lease to own and i have a person to lease to. Can I do a lease to own and then turn around and lease to own it to them.

Check out the chapter on Greg Murphy in "Your Town, Your Real Estate Profits"; he's one of the masters of this technique. Sometimes this is called a sandwich lease option. Basically you get a lease option contract with the seller at say, 5000 down and 1000 a month, then you lease option it to the buyer at maybe 7000 down and 1200 a month. You make the payments to the seller from what you get from the buyer and you keep the difference.

i have read that chapter over and over and am still a little confused. Do i need to have insurance on property? Do i just do a lease with option contract and then turn around and do another one?

Title doesn't change until the purchase option is exercised. So the original owner maintains insurance. Your tenant of course will want renter's insurance.
Yes, just 2 l/o contracts. You would be wise to have an attorney look at them though, or consult with an experienced investor in your state on what contracts they use.

Thanks thats good info. Actually I just found a really good attorney. Got his name from the REI contacts I made the other week. He handles all their assignments and he is a fellow investor. Spent about an hour on the phone with him the other day. Tons of good info.