I gave an update on The Corn House yesterday, and forgot to mention one thing. I’ve had about a bunch of my own cash tied up in this house for the past two years, and without refinancing my cash out (i.e., using some financial leverage), my ROI on that cash investment is ending up to be pretty small.
So, I’m in the process of refinancing that property to pull out about 65% of my cash, which should leave me at about 55% loan-to-value (LTV) on the loan. While I could probably pull out more, I like to ensure that I’m not over-leveraged, that I’m still making good cash-flow each money, and that worst-case — even if the market were to drop another 10-20% — I’d still have plenty of equity in the house.
Hi J. Scott,
I am a beginning investor here in Georgia with great credit some cash reserves and self employed (no present cash flow as of last month). Can you turn me on to your lender and others that would loan to someone like myself? How should I present a good case to these institutions to trust and begin a relationship with me. Do you think that opening a savings acct. of 10k would help in my case with local lenders.
I also have properties with equity in them from my home town Portland, Or. Would these lenders do a cash out refi in my case? Because this would give me the back up cash I need with all the fees and holding cost involved with flipping.
Thanks J. for your help with these questions.
Jeff
Hey Jeff –
I got your email a couple days ago, but was away for the weekend (wasn’t ignoring you!). I’ll shoot you an email response in the next day or two when I have a couple minutes to respond…
I am also a new investor and would also be interested in some tips on getting financing to do a flip. I have a few properties in mind right now, some of which are going up for auction shortly. I’d love a few tips!
Hey Matt –
Unfortunately, in this tight lending environment, there aren’t a lot of options. Very few banks are offering any rehab products and hard money lenders are charging ridiculous rates. My best suggestion is private money — either borrow from friends and family, or consider finding professionals with large 401k’s who are willing to lend you money out of their retirement accounts.
I wish I had a better answer for you, but these days, I’m having the same issues with finding good lenders…