Posted by Big J on April 03, 2008 at 10:44:28:
I see, now that makes a lot more sense! I’ve got a friend willing to loan 10k for 10 years at the going interest rate of 6 something %, so I’ll go with that for this starter house, and then try to get going with my bank for the next project and if they refuse I’ll do the prosper method you described.
Thanks!
Need a 10k loan - Posted by Big J
Posted by Big J on March 29, 2008 at 03:29:26:
Ok I found a sweet deal for 12k. I can put down 2k (maybe a little more) so I only need to borrow 10k, preferably on a 10 year note so I can cash flow nice. The place just needs siding installed (comes with it) and a new furnace put in or electric baseboard heaters and a few other tiny things. I can do all the work myself. The house should be worth 22-25k when done, or rent for 350 or so per month which is what I’d rather do with it.
The problem is I haven’t got my taxes done yet, and I’m self employed and my bank wants tax records to verify income. Well I typically don’t make much profit with my business, as I’ll buy new equipment before giving anything to the IRS, so I’m worried even after I do my taxes they won’t loan me the money, and by the time I get it done this deal might slip through my fingers. I just finished my bankrupty (was 700 a month for the last 4 years) and I’m debt free. I have collateral worth 10k (title to my truck and jet skis).
I mainly want to establish a relationship with a bank that will eventually give me up to 100k credit or so to buy rentals and rehab them or flip. I don’t want to go into debt for over 100k and around here you can buy rehabs for 10-20k every day of the week. This is a good starter house for me, and I’ve researched real estate for 15 months now and want to get into it. I have several local mentors too which are helping me, local RE millionaires.
Re: Need a 10k loan - Posted by James Harris
Posted by James Harris on March 31, 2008 at 05:32:47:
If you have some mentors, then I would ask them to be a possible private lender for you. This would be a very valubale asset to you.
Re: Need a 10k loan - Posted by jeff
Posted by jeff on March 29, 2008 at 18:40:50:
youll have to cover PITI and any disposable income requirements your bank has (typically around $800/month or so for a single borrower).
your only trying to borrower 10K and have no other debt. that doesnt require alot of income. but if you write it all off, youll need some other source of income.
there are still a few (very few) bank statement program lenders out there. if you have bank statement deposits to prove income you might get away with it. these programs used to be abundant, now…they are few and far between and getting more scarce by the week.
Re: Need a 10k loan - Posted by christopher w
Posted by christopher w on March 29, 2008 at 09:59:13:
Looks like you are going to have to bite the bullet and show some income. I find it interesting how self-employed borrowers never want to pay taxes but they want people to lend them money. If you have mentors that are millionaires they should have no problem loaning you 10K. That is a drop in the bucket to them.
Re: Need a 10k loan - Posted by Big J
Posted by Big J on March 31, 2008 at 11:59:57:
I already did. While they are all eager to answer questions and talk about REI, none seam to eager to loan out money, or the terms were deal breakers for me. I think that the guy I talked to yesterday about this would have done it, but he has some big expenses right now with taxes due. Plus he said I’d be better off rebuilding my credit with my bank so I can make deals without needing other people all the time.
If I come in with 25% down and show proof of income by finishing up my taxes, they will most likely do the loan. So I’m just going to get my taxes done and see what happens.
I’m trying to sell a jet ski I have which will get me another 3,000 to invest, that would give me 50% down, surely some bank will do that! Plus the place will double in value once I do the repairs.
Re: Need a 10k loan - Posted by Big J
Posted by Big J on March 30, 2008 at 11:52:37:
Well its not that I don’t want to pay taxes, I just always reinvest everything back into my business and last year was weak the first half. I can leverage that money towards real estate just the same.
It’s pretty sad that someone who works at mcdonalds could probably get a loan easier than me, I make pretty good money when I do have work to do, but I’m not busy all the time, so I want to get into real estate to build residual income and give me something to do when all my contracts are caught up.
Re: Need a 10k loan - Posted by christopher w
Posted by christopher w on March 30, 2008 at 17:44:16:
You could try Prosper.com. There are several people on that site that borrow money for REI purposes.
Re: Need a 10k loan - Posted by Big J
Posted by Big J on March 30, 2008 at 17:50:08:
I’ve heard of them. Do you know if they will go 10 years on a note? I need the note to be at least 10 years to cash flow on it. Also can you pay it off early if you wish?
Re: Need a 10k loan - Posted by Stan (Ga)
Posted by Stan (Ga) on April 01, 2008 at 08:27:10:
Frankly, it would be a terible mistake to go 10years on this note. I can state wholeheartedly that you will not find a lender with favorable terms. Best you might do is amortized for 5 balloon in 3 and that will be at an ungodly interest rates. Your best bet is a small community bank getting a personal loan. Still will be in the 10% - 15% range.
Re: Need a 10k loan - Posted by Big J
Posted by Big J on April 01, 2008 at 11:01:56:
How is making positive cash flow a bad deal? If I go 5 years my PITI gets up there to the iffy zone on positive cash flow. I can always pay off early, but you can’t pay off late if you get into trouble.
One of my mentors suggested always getting a longer (preferably 30 year) loan if you can, so you can maximize cash flow and in tough times the payment is less and you can take the hit. Sure I could do it on 5 years, but then I have no cash flow, and if something goes wrong I’m taking a loss. I have a friend willing to do the loan for 6-7% for 10 years, and my bank said they would do any commercial loan for up to 15 years locked in for 5 on the current interest rate (which is about 6 something), once I get my taxes done and can show income.
Re: Need a 10k loan - Posted by brandoncbsre
Posted by brandoncbsre on April 02, 2008 at 06:21:25:
Okay let me get this straight…You can get rehabs in the $10-20k range any day of the week. But, you dont want to to miss THIS one?
Prosper loans are all 3 year notes and yes you can pay them off early with no penalty. And NO I am not afiliated with the site in any way other than the fact that I have participated as a lender some.
Take the short term (3 year) loan get the house done and rented. It will be free and clear at this point. Go to the bank and borrow enough to pay it off. You will be able to include the rental income and they will feel better about the collateral.
If you can get houses for $10-20k any day of the week…Well then, Rinse and Repeat!
Good Luck to you. And if you email me your loan listing number I’ll consider tossing in a Fiddy.
Re: Need a 10k loan - Posted by Big J
Posted by Big J on April 02, 2008 at 10:43:25:
Like Rich Dad says in his real estate books, “How many deals can you afford where you lose 100 dollars each month?” Not to many he replied. “How many deals can you afford where you make 100 or more each month?” As many as I can find. Rich Dad smiled.
I’m no expert, but I’ve researched real estate, listened to Robert Allen, Rich Dad, trump and other audio cds, etc and have 3 real mentors locally. None of them advocate negative cash flow on any deals, and my cash flow would be negative on a 3 year loan.
I don’t see any advantages to a 3 year loan where you have negative cash flow, other than less risk factor by owning it quicker. With my strategy I can take the positive cash flow, save it and combined with my earned income buy another one in just a few months. But if my earned income gets affected by each deal in a negative way in 3 years I’ll only have 2-3 units that might be paid for, where my plan I’ll have at least 6-10 houses in 3 years and cash flow will be at least 100-150 on each unit. I can sell one once in a while and pay off 2 with the capital gains I make on the rehab. So with my strategy, I should be able to not only have positive cash flow on each deal, but by selling one house out of 3 I buy I can pay off the other two. So its not like I’m going to sit on this loan for 10 years, but if I do, its OPM paying it off anyway, not mine.
Re: Need a 10k loan - Posted by brandoncbsre
Posted by brandoncbsre on April 03, 2008 at 05:59:02:
Reread my post…I did not say anything about keeping the 3 year loan. Once you get the house fixed and rented GO TO THE BANK.
The house will be free and clear because the loan from Prosper is UNSECURED.
You can then get the bank to loan $10-15k on the house and you can pay off the prosper loan or do another one.
Get yourself established with a bank and you will be a lot better off.
I am only recommending you keep the Prosper loan for 3-6 months.
Good Luck
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