I have been buying owner-carry-back TDs for 45 years -- starting in 1976. I was doing "flips" in the Los Angeles ghetto when we still called them "Equity Purchases". I will have Mortgage Broker's license by next summer when our construction season starts... so I know a bit about what you are trying to do. I will be lending my own money -- not doing the traditional MLO lending. Maybe I can help with some advice...Hello Everyone,
I recently got my license to become a Mortgage Loan Originator. I have been working with a broker for a couple months now. I am interested in getting into real estate investing, specifically to do rehabs and flips with the ultimate goal of buying homes to keep as rental property. I have a few questions:
1. Does anyone know the best ways of generating leads as an MLO? I have been cold calling and trying to build relationships with realtors in the area. It has been working okay, but nothing too great.
2. Hard money loans for flips: I have found quite a few lenders that provide hard money loans with a down payment of 10%. I was wondering if anyone knows of any legit lenders who provide hard money loans with a smaller down payment? I have found a few companies that claim to provide 100% of funding for the home and the rehabs, but the companies seem sketchy. Also, I am sure it's possible to get a hard money loan with a smaller down payment, but I am assuming it is only for those people whom have experience and who they have already worked with.
3. I know a few people who do rehabs and flips, but they tend to be very limited with the information they provide, which is understandable since I would be competition for them.
I am extremely thankful for any information anyone may be able to provide!
I will NOT lend to people doing "flips". I like my money and I don't want to lose it. Why? That market is very soft right now. Most of the people out there don't know how to do their numbers and they are going to lose money on their deals. NO. 10% is not enough down -- especially on a flip. Before you loan your money on a flip, try doing one (or a bunch of them) yourself. If you do lend your money, you're going to get the property back all torn up and your money will disappear with the borrower when they exit stage left. Then you will need to put a lot of time and money into the deal to recover even a part of your investment. How much pain do you have to endure in order to learn that part of the business?
Have you managed property before? You are talking about fixing and holding. I do that every day with my mobile home park. I own the mobile homes and I rent them. It's a full-time, dirty, time-consuming job.
Here's what I suggest. Buy a small unit building (2-4 units). Move into it. Fix it up one unit at a time. Mow the lawn. Plant the flowers. Paint, paint, paint everything. Deal with the tenants. When you get it fixed up in a couple of years, you can buy another and do it again. IF you can save enough money over those couple of years, buy a "fixer" and do that one the same way. You can build up some remarkable handyman skills within those projects.
In the meantime, build up your knowledge of the flip business and your contacts. It's probable that one of those projects that these hard money guys are funding is going to go belly up. Your dream is to pick up the property for a song. BUT, you must have the cash in your hand to take over the project!