I get calls every day from investors who are new to the business. They get pre-approved for hard money and take out loans and then they start searching for the deals. There are many deals out there, but is it the right deal for you? You do need a down payment of 25% plus unless it is a seller financed deal. You are limited to less than 10 mortgages on your credit.
With a hard money loan or rehab loan, an investor can get a loan to purchase the house and fix it up. Once the rehab work is complete, they can refinance at 75-80% of the market value. If the deal is structured correctly, there should be some cash flow each month from rent. Some investors prefer to sell the house prior to a refi and cash out with the sale. Some investors prefer just a rate and term refi and would rather have larger monthly cash flow. As an investor, you must decide which will make you meet your goals. Maybe all of these scenarios will help you meet your goals. The savvy investor knows which house to rehab as an A or B type rental, which house to flip to another investor or sell it retail and which house to hold on to because of the future equity it will provide. Unless you are very experienced or have plenty of money to play with, pick one or two scenarios that work toward your goals and forward the deals that don’t fit you criteria to other investors. They will do the same for you. Pace yourself, you don’t need to do them all. Sometimes the timing is just not right for someone else; don’t discount the deal as one that doesn’t work for you either. Do your homework and see if it works for your game plan. If it does not work don’t just pass on it, pass it on!
If you would like some direction on goal planning or need help in working out numbers on a deal to fit your goals, please don’t hesitate to pick up the phone and call Wendy Sweet at (803) 831-2456. We are happy to share what we know and we will be happy to direct you to others who are also happy to share information.