Hey everyone !
First time writing on the forum so take it easy on me.
I am looking at flipping houses under my company/trust an I will be doing this as my full time job. What is the best way to get financing from a bank or private lender, while there is no income coming in? I will have 100k in equity and no debt with a very good credit rating.
Any advice to the situation would be awesome !
Thank you
You’ll need to demonstrate that you can service the loans. For a self employed applicant, this usually means providing two years of financials for a full doc loan.
First 2 years are the hardest.
I would recommend that if you have friends or family that work in business if you can be employed on a on off type arrangement. where you work fulltime hours whilst at work and then when you are renovating you have time off or say you cannot work for 4 weeks. I say friends and family because not many normal employers would be able to cope with it.
Another way is to work odd hours at a job. Ie a 5pm – 2am type job.
Or you could get a partner/ another director who comes In for a percentage of profit after costs. They supply the serviceability and you provide the work and have say $1k a week for 40 hours of your time as a expense.
Hey everyone ! What is the best way to get financing from a bank or private lender, while there is no income coming in? I will have 100k in equity and no debt with a very good credit rating?
Well… put yourself in the lender’s shoes. The want to be able to see that you can make repayments. Sounds like that is not possible, so a conventional lender (ie bank) might not work for you…
A private lender might be ok with it, given the right parameters.
Yip your right
The ones I have come across have lied through their back teeth, conned every one they come across I.e. Contractors
And then have gone broke
A typical person in this category is very excitable runs around a lot looking busy, but doing nothing, can be very friendly & engaging looking to earn lots of money with no real effort
Promise every thing deliver nothing but cayouse & frustration
Early warning signs are large grand plans quickly followed by being late and unreliable
They dont necessarily have to be a developer they can contractors as well, some of us are even lucky enough to employ them for short periods, I guess the they become contractors, then developers then broke
How ever their are some real clever ones who keep all Their money, but there is another name for them
I would strongly advise all to stay well away from people who fit into the above
But hay best of luck
This reply was modified 10 years, 4 months ago by Terry.
There has to be a loopol in the system somewhere.. This Can’t be impossible ! Surely someone has done it before.??
Lenders won’t be keen on these loans even if you had a job – short term soon to discharge. Brokers will not be keen as they have to give any commission back to the lender.
All you need is a stable income source – and dreams about income from flipping don’t count, need strong evidence of success
<div class=”d4p-bbt-quote-title”>renov8r wrote:</div>
There has to be a loopol in the system somewhere.. This Can’t be impossible ! Surely someone has done it before.??
Lenders won’t be keen on these loans even if you had a job – short term soon to discharge. Brokers will not be keen as they have to give any commission back to the lender.
All you need is a stable income source – and dreams about income from flipping don’t count, need strong evidence of success
Thanks for you imput Terry,
Also I am a qualified carpenter. Is there a way were you could prove that your earning your income from the job that way ? By sub-contracting to my investing company?
It’s possible but requires a few years of planning on the right loans and buy structure, lender and most importantly pre-planning…not something you can do off the bat.
Most of our flip clients who’s doing this now full time ( flipping 2-3 properties per year ) had to go through a 12-18+ month planning stage. As the only way to get this across the line without working was to consider the “flip project” as a BUSINESS ie your a professional flipper…
^ As you can imagine, getting the 1st years income is the hardest and hence why we can’t write the loan till a good >12-month after planning with our brokers and your accountant.
Else the easy way out is to keep your full time job and using that income to service the loan for the flips. But at the same time you may want to plan for the ^ above if your wanting to do this full time.
But you can imagine the amount of work required and planning, so really we also pre qualify our clients before we take them on board this flip journey to make sure their financial, mental and desire is strong enough to last the 12-18 month pre planning.
It’s possible but requires a few years of planning on the right loans and buy structure, lender and most importantly pre-planning…not something you can do off the bat.
Most of our flip clients who’s doing this now full time ( flipping 2-3 properties per year ) had to go through a 12-18+ month planning stage. As the only way to get this across the line without working was to consider the “flip project” as a BUSINESS ie your a professional flipper…
^ As you can imagine, getting the 1st years income is the hardest and hence why we can’t write the loan till a good >12-month after planning with our brokers and your accountant.
Else the easy way out is to keep your full time job and using that income to service the loan for the flips. But at the same time you may want to plan for the ^ above if your wanting to do this full time.
But you can imagine the amount of work required and planning, so really we also pre qualify our clients before we take them on board this flip journey to make sure their financial, mental and desire is strong enough to last the 12-18 month pre planning.
This is the info I’m after! Thanks Mick C :)
The job I’m in atm is keeping me from putting 1000% into my future career (flipping houses). I am all about due diligence, I have read a lot of books and gone to a few seminars.. I was thinking of doing the “renovating for profit workshop”. I have set up a company an discretionary trust for flipping houses and my first project will be my dad’s house with a 10% renovation budget of the current value of the property ($450k) then will buy my first investment property with aprox. 100k savings. I am in the process of putting together a business plan and a hard copy of my due diligence to find, filter & buy property.
Hi Renov8r, I am looking at trying to accomplish the same thing! I am also a tradie and project coordinator and have been working on houses as a side project for years…breaching that gap and launching into it full time is bloody hard! I am not sure there really is any simple solution but I agree the juggle of working full time and renovating full time is certainly taxing on the body, mind, lifestyle, family etc.
Some of the problems that I am still trying to get around include:
– keeping a borrowing capacity within the first few years (as mentioned above)
– Maximizing the profit if possible and maintaining cash-flow
– factoring in tax, stamp duty, agent fees etc – it all seems to add up and eat into profit!
Just a thought if you were willing to look at options for the first few years to get yourself started. Perhaps you could consider JV’s? Its the path I am travelling down
Anyways goodluck and keep us posted on your journey
Rach
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