How To Get Funding For Ugly Houses (Fixers)

Here's how you get funding for ugly houses. Today's video, we're going to share with you basically how to get funding for your ugly houses. We're going to share with you everything from A to Z on the requirement, what it takes to get apartment lending. And we're going to talk a lot about DSCR loan if you want to actually buy something and fix and hold. You guys ready? Let's go. All right, you guys, we are now at the Springboard to Wealth funding office. This is where it all happened behind all these doors. This is where we've lent millions and millions of dollars for a lot of people. Now, for a lot of you guys that don't know, Springboard funding, we just don't do homemade lending. This is only for our students. We do for everybody out there and not just Springboard only. Before we get started, I want to introduce you guys to my man, Derek. He is responsible for a lot of the loan that happened for Springboard funding. How many States do we fund in? Cause I know we don't do all 50 States. Yeah. So what's that we don't do in? So the only States that we do not lend in are the Dakotas, North and South Dakota, every other state we will, we will fund. What does it take for someone to get funding for a fixer upper? Yeah. When you're buying a fixer, conventional financing is really not a great option because they're not going to finance the rehab portion. Whereas hard money, we're going to help you acquire the property and we'll give you a loan for that. And then we'll finance a hundred percent of your renovation. As you guys know, as investors, it's very highly competitive right now in terms of making offers to sellers and you want to be able to move quick and close quick hard money. We can close in seven days conventional. It's going to take a lot longer than that. So we're almost synonymous with cash at this point. All right. So let's dive in. What is the most important requirement someone need to have in order for them to actually get funding for how many lending credit is? Uh, the number one thing that we're looking at, um, when it comes to the borrower's background. So as long as your credit's above six 60, you qualify for a hard money loan from us. Now I know in traditional lending, the higher your credit, the better the rate. It doesn't work the same way with hard money lending. 700 is kind of our, our cutoff. So if you have a above 700, you get a little bit of a better rate. And if you're between six 60 and 700, your rate's a little bit lower. We're mostly looking at investing experience to determine what interest rate we give you. So let's just say someone don't meet six 60. What are some of the options? Yeah. Ton of options. So you can go get a partner and create an LLC with that partner. And if they have a credit and leverage their credit score, uh, that's probably the number one option. And we see that happening all the time. Okay. Let's say someone that they want to partner with. Yeah. They have credit and they have money liquidity, right? But they don't have real estate experience on rehabbing, but the person that who's buying it have experience of rehabbing. How do you deal with that? That's perfect. Yeah. So we would just tell you to structure the LLC, uh, accordingly. So you, if you have experience, you'd want to have maybe a 25% owner of that LLC, and then you can have your credit partner, maybe be a 75 or percent owner of the LLC. We'll use their credit and liquidity, and then we'll leverage your experience and it'll be the best of both worlds. What's the second requirement they need? Well, to actually get funding, you do need to have money for the down payment and closing costs. So here's how I work. He's going to explain more. Okay. The down payment, depending on your experience, if you got experience, they are open to doing 10%. If you have less experience, it's 20% is 10 or 20% of purchase price and the rehab. So let's say the purchase price is 400,000 and the rehab is, you know, 50,000 making it up. That's 450,000. 20% of that is what they will actually require you at the down payment. Is that correct? You want to explain that? Yeah, we'll lend. We're looking at your total costs. So we're going to lend between 80 and 90% of your total costs, depending on how experienced you are as an investor. The more experienced you are, the closer you are to that 90% of the cost, the less experience will still get you up to 80% of your costs and a hundred percent of your renovations. All right. So Derek, man, I don't have the 10%. I don't have the 20%. What are my other option? Hey, just get a partner. So if you know how to find deals, you're scrappy, that can be your strength. Find a partner with liquidity and cash, partner up, create an LLC. And then now you guys have the perfect team to come to get some hard money financing and get the deal done. Let's talk about another option. Maybe, yeah, maybe you're an active investor and you have built up a portfolio of rental properties. You can go get a cash out refinance and maybe a DSCR loan on your rental property, get that cash and then use that for the down payment, um, on your purchase. Yeah. So we do that all day long. And, um, you know, it's kind of like a rinse and repeat method. And another one is that on your primary, if you have a, a good equity in it, you can get a HELOC on that. And then you can actually pull something like HELOC as a down payment to do this flip, right. And then you flip it and then put your money back. The key is put your money back in the HELOC so that you got to over leverage yourself. Exactly. Exactly. Yeah. You need credit and you need down payment. If you still want to do fix a flip or fix a hole, even with homemade lending, what is the third requirement for them to get funding for a fixer upper? We're going to be looking at the property itself. So we can do hard money loans on one to four unit, uh, residential investment properties. So non-owner occupied. And we just want it to be in a non-rural area. Uh, we're not lending on commercial properties right now. We're not lending on mixed use properties, land, farms, things like that. But a one to four unit residential investment property is all day long. Let's say we find a property. Yep. We got credit. We're above 660. We got the down payment. We have the idea fixer. How long does it take to actually close a deal? We can close a deal in seven to 10 days. Okay. So seven to 10 days. And then what does the term like? Is it six months? Is it one year? Is it, you know, what does it tell us about that? Our standard term for a fix and flip loan is 12 months interest only payments. We can go up to 18 months. Uh, we can go up to 24 months if needed and there's no prepayment penalty, which is great. So as soon as you get you and your contractor get in there, fix it up, get done with the rehab. Maybe you want to sell it and you sell it. There's no prepayment penalty. Maybe you want to refinance. You can refinance with no prepayment penalty. So that's what's great about our loan. Everybody's telling me rates are a little high right now. It shouldn't, you shouldn't buy the property right now. You should wait. What do you think about that? I think, uh, I disagree. We just had our biggest quarter ever and a Q4 is going to be bigger than Q3. So there's a lot of investors still active. There's a lot of good deals out there. And everything's about the number guys. Okay. It don't matter when the rates are low, you still got to buy it right. You got to get the right rehab cause and you got to get high ARV. If the interest rate is high, you got to still got to buy it right. You got to get the right rehab cause and the ARV got to be right. So really it all comes down to the numbers. Exactly. It's all about the numbers. And with fix and flip loans, they're short term loans anyway, and they're interest only. So you're not going to be paying a ton of interest every month. Get the, get out and, uh, you know, either refinance or sell the property. We want to shift gear and we want to share with you. Well, what happened if I don't want to fix them flipping? I just want to fix and hold it right. How does hard money play on this role? We just recently did a deal recently where I bought a fixer upper and springboard funding funded it. We're going to show it the number and they want to show you actually how we actually refinance out of hard money lending. What I did. And if you guys can't do what I do, Derek's going to show you another option what they can do. So Derek, I bought this property purchase price was four 55 and the rehab costs total was one 70. My all in number was six 25. Since I am an experienced investor, I've done a lot of deal. Springboard funding decided to say, Hey, you know what? That you can put down 10%. So all I put down was 62,500 bucks to do this deal. When this house got done, I decided I'm going to keep the property versus flipping the property. So I went to my portfolio bank and they sent out an appraiser and they appraised it for $825,000. So basically I have about a $200,000 worth of sweat equity. I did on this. Okay. I have a portfolio bank that basically, um, you know, do a lot of my takeout loan. So basically my, uh, portfolio bank sent out an appraiser. They appraised this. And then they said that we will fund up to 75%. We'll give you a lot up to 75% of this. 75% of eight 25 is, so yeah, no, they want to give me 618,750. Remember I'm all in for six 25. They only lend me this. So my only thing is I have to leave in 60 to 50. So out of my $62,000, all of the come back to me, my pocket other than $6,200 to leave in the deal for them to finance this whole deal, this deal right here, you guys. Okay. It's now been basically in permanent financing and springboard funding got cashed out already. Now, Derek, if they don't have a portfolio bank like me, they don't have the ability. If someone wants to keep a property like this, what can springboard funding do to help them get a takeout loan? Yeah. So springboard funding, as long as it's an investment property, we can do a DSCR loan debt service coverage ratio, or we're going to underwrite to the property's cashflow itself. And we'll lend you up to either 75% of the property's value. If you want to take home some cash and you build up a lot of equity in it, or if it's just going to replace the current loan and there's not going to be any cash that you're walking away with, we'll end up to 80% of the property's value. But the key is though, they can let up to 75, 80%, but they still got a cashflow. Speak about that. Exactly. So the loan is supposed to pay, the property is supposed to pay for itself. So we're going to take a look at your rental income. We're going to take a look at the principal and interest payment, your taxes and insurance payment. And then we want that to be a positive number above one, one or above. So then the property pays for itself. So let's say in this example, the property got a pay of 825. You will lend up to 75% which is 618,750. And the key is this is a mortgage on this principal and interest. I did it already. It's like 40, uh, I'll tell you exactly what it is. It's, um, $4,200. Uh, property tax is 350 and insurance is a hundred dollars. So your total is 4,650. So how much positive cashflow they got to have above this for you got to actually lend them DSCR loan. So you would want your rent to be, uh, about 4,650, maybe 4,700, ideally 5,000. I think that's kind of what the market rents are telling me. So that's a pretty good margin of cashflow. And then in terms of seasoning, I mean, we'll, we'll do a cash out refinance after six months. You can, you can cash out refinance and then we'll do a rate in term refinance, meaning you're not getting any cash. As soon as your rehab's done, there is no seasoning minimum. Whereas conventional is looking at mostly 12 months. There you go, folks. Okay. So you want to do fix and hold. Now you have an answer on how Springboard funding fund fix and hold and their terms. Okay. So I think my man, I think we explained a lot to everybody from, again, let's read a quick recap. For them to get funding for fixer upper to fix and hold or fix and flip, they're going to need credit. You're going to need down payment money. You got to get the right single family, one to four unit. Exactly. Okay. And obviously if they fix and flip, no big deal. If you fix and hold, you got to meet these basic criteria. Anything else we're missing? That's it. Okay. And again, we can get a deal closed within literally seven days. Yeah. We can get a fix and flip loan closing seven days and then a DSCR loan closed in about 15 or 20 days. All right. So if you guys have any investment loan for us, let us know, Derek, what are they going to do? Just go to the website, submit a deal and we'll be your second pair of eyes. We'll you'll talk to one, one person on our lending advisor team. We'll take a look at the deal. We'll put some loan offers in front of you. We'll tell you what the next steps look like. And, uh, you know, answer any questions that you might have along the way. All right. You got the link below. Check us out.