Domingo Halliburton
Handmade in USA
They mention hard money lending which is how you start on projects like these.
Hard money is not necessarily worried about credit scores. Theyre worried about how much they can sell the property in a fire sale if everything fails. They want to see a property worth something and that it will cash flow. This article is talking about the middle market (millions to hundreds of millions) but you can find many lenders that will serve small buy and flip i.e. like a 100 grand.
The catch is you need to be bringing in 20% (probably more if youre a startup) cash or liquid assets to get it going and theyll provide the other 80. They want out in a few years as well. More likely 1-2 (depending on the risk). For the risk theyre taking theyll probably hit you with high interest rates with a balloon payment at the end. But thats alright.
So that means you need an exit strategy....either refinancing or selling. They mention refinanincing as well in the article...your local bank will come to the table if you're actually cash flowing, servicing the debt and making money. Or whoever, theres a ton of options, the hard money lender just wants out and paid.
Obviously its a lot more complicated than this. You want your incomes to be servicing the debt at atleast 1.25 times. You need a whole business plan including the right location, projections and the right construction guys (managers, arcitects, engineers, etc.). A small project shouldnt need all those people but you need to know what every dollar will be spent on. This is probably thousands more that you will spend out of pocket. Including appraisals that cost hundreds if not thousands (definitely thousands if we're talking million dollar property).
@ThreeLetterAgency
Hard money is not necessarily worried about credit scores. Theyre worried about how much they can sell the property in a fire sale if everything fails. They want to see a property worth something and that it will cash flow. This article is talking about the middle market (millions to hundreds of millions) but you can find many lenders that will serve small buy and flip i.e. like a 100 grand.
The catch is you need to be bringing in 20% (probably more if youre a startup) cash or liquid assets to get it going and theyll provide the other 80. They want out in a few years as well. More likely 1-2 (depending on the risk). For the risk theyre taking theyll probably hit you with high interest rates with a balloon payment at the end. But thats alright.
So that means you need an exit strategy....either refinancing or selling. They mention refinanincing as well in the article...your local bank will come to the table if you're actually cash flowing, servicing the debt and making money. Or whoever, theres a ton of options, the hard money lender just wants out and paid.
Obviously its a lot more complicated than this. You want your incomes to be servicing the debt at atleast 1.25 times. You need a whole business plan including the right location, projections and the right construction guys (managers, arcitects, engineers, etc.). A small project shouldnt need all those people but you need to know what every dollar will be spent on. This is probably thousands more that you will spend out of pocket. Including appraisals that cost hundreds if not thousands (definitely thousands if we're talking million dollar property).
@ThreeLetterAgency
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