The Dirty Truth about Gap Funding!


What is Gap Funding?

It’s a term that’s used very loosely.

To some, it may mean that they are looking for additional capital to “gap” a loan. However because this is such a rare occasion, most have no idea what this means.

First of all, when people seek gap funding, they don’t realize that they are alerting the lending community that they are not liquid enough to do their deal. This is already a red-flag!

Who gets Gap funding?

Gap funding, when used in the sense that I referenced above is reserved for operators and investors with prior experience flipping properties. This means that lenders want to see that you were on the HUD or Settlement statement, not just participated on the deal.. this means you have to prove your exits.

Also this experience has to have taken place within the past 1-3 years. They want you to have current knowledge of the challenges of fix and flipping before they trust you with a no-money-down transaction.

They also want to see that you have “reserves”.

This means that once they make the 100% loan to you, which includes their expensive gap capital contribution, they want to see you how you will make those payments!

If you expect them to cover all of the rehab, construction, holding costs and selling costs, the deal has to have lots of REAL potential after remodel value, prove this by having supporting comparables.

The subject will have to be in the best areas, and you need to know your rehab budget, and get it confirmed by a contractor and his proposed team. Get each trade’s bid verified if you must. This will allow you to prove the feasibility of the project. The lenders actually want to know what materials, how much labor, hours needed to complete the deal, etc.,

Gap Funding behind another Lender?

This is the usual request, a prospective client goes and gets a 1st loan quote with a “gap” that they need to find somewhere.. anywhere ! Many times the down payment is not sourced and doesn’t need to be seasoned.

The general answer is NO.

  • No because the lenders don’t know each other.
  • No because the lenders don’t know you.
  • No because I don’t know you.

Real estate is a relationship business, and a joint venture (which is what you’re proposing) is akin to a marriage, and it takes a bit of dating, and lots of trust to create that environment.

In a short answer, forget about it.

Do you have recent experience? And you need gap funding? Why?

Lenders wonder if you have a problem managing money, managing your team, managing the rehab process, or who knows right?

They ask themselves if you have recent experience why would you need gap funding.

You should be prepared with answer and Letter of Explanation to calm these concerns.

A.R.V Lending

ARV = After Repaired Value

In cases when you find an awesome opportunity, some lenders will use a formula – they add acquisition cost, plus the rehab cost, plus the closing costs, and then divide that number by the expected retail price, it gives a number, that percentage is your % of ARV, generally they max this out t 75%.

Example = $650,000 purchase price + $100,000 rehab, 8-9% closing costs = $117,000 = $867,000. Divide that by the expected retail price of $1,300,000 = 66% of ARV.

If you landed that deal above, an ARV, asset-based lender may be interested in working with you, provided you have experience with this level of flip.

That brings me to another point. If you have history of flipping $100,000 homes, but suddenly want to flip a $1,000,000 home, you may meet some resistance. Not only does the expectations grow larger, but the LTV’s get smaller, which means that down payments go up, you may then have to bring in 10%.

Alternative Funding to Gap your deals

My advice is that you consider the following alternative funding methods we’ve used to help investors get deals done.

In order to get funding, you have to be coming from a position of strength. This means you should have good credit, in this case I mean 700 fico scores. If you have a business with revenue even better, having assets that can be leveraged and possibly earning income sweetens the deal!

Unsecured Personal Funding

This can come in the form of credit cards, credit lines, from a variety of sources. These have different terms including 0% interest for an intro rate to induce you to use the credit, or 8,10, or 18%+ right off the bat. You can stack this funding up and settle around $250k, which is probably 6-7 different tradelines, with major banks like B of A, Chase, PNC, Barclays, Navy Fed, Penn Fed, Discover, PayPal, and many others. Of course, every tradeline will suffer you an inquiry, of course, this fall off or can be removed for a fee.

Business Term Loans

The business term loans are also for 700+ fico scores across the board, you will need to claim $50,000 in personal taxes, if you qualify – the rates are around 6%-9% depending on your credit profile. The term is 5-7 years. We can raise up to $500,000.

Cross Collateralization

If you have existing assets in your portfolio, these can be residential or commercial, they should have some equity, perfect if they are long-term holds. You can add extra leverage to your purchase by allowing the lender to place a lien on additional assets. This compels the lender to move forward with the loan because you’ve reduced the risk and shown good faith.

Revenue Loans

If you have a business and you earn income, you may be able to leverage that and get a lump sum that you can use for gap funding your deal.

Friends, Family and OPM

This is the hardest source of capital to get, but it would likely be a better choice than shopping for a 2nd lien, often they won’t require so much paperwork, and probably won’t require a 50/50 split, saving you a bunch on the back-end.

Creative Financing

Today we need to be fully educated and aware of the many alternative funding options available, or know someone that is!

Sometimes funding a 1st or 50th transaction requires someone with the resources and experience with structuring multiple funding rounds to achieve a goal.

I will be ready to hold your hand to get you through your first flip or purchase of a rental property, or refinancing of a portfolio or project that is about to balloon, or you just want to explore new terms, it’s no risk! I never charge consultation fees to quickly go over a loan scenario or help a borrower through the process.

If you have an interest in real estate investing, flipping, or in the market for a loan, please contact me.

Wholesaling and Flipping

Many people start off wholesaling properties – this is another term that is often used freely and could mean many things, but for this article, I’m referring to finding sellers and properties listed with agents and matching them with your investor and buyer lists to earn marketing fees for facilitating the transaction.

Investors AKA check-writers need “boots on the ground” in order to drive leads for analysis. This builds their funnel, you keep a flow of target properties coming their way, they’ll reward you with fees of $1000-$10,000+ depending on the deal and the principals.

Using my old-school approach and combining this with technology and tools, you’ll learn to structure deals from on-the-job training, but I’ll be here to answer your questions and hold your hand.

Private Lending Consultant Flight School

I offer mentoring – in these formats: Live, and on your schedule, we’ll have phone calls and Zoom screen-shares, you’ll get lots of resources including documents, templates, marketing and full instructions. Tactics that work in today’s market! You can get more info here.

Private Lending Success Video Course

I’ve Pre-recorded 6 modules that will teach you the basics and tricks I use in private lending, perfect for real estate agents, loan officers, real estate wholesalers, even those looking for another source of income. This course is short – 4.5hrs, and will teach you how to use a mobile phone to launch an extremely effective and powerful marketing campaign.

Download Private Lending Success Ebook FREE for a limited time!

Visit this link and confirm your email and receive the PDF

You can register for free on my pre-launched site Lender Tribune

Or if you want to pay a few dollars, go over to Udemy and sign up there.

greg@fixandflippers.com

323-632-3279

Los Angeles Investment Opportunities


Two R2 Projects! Build New Duplexes!
Both in the 90061 Zip Code!

1229 E. 109th Place Los Angeles, CA 90061


R2 Zoning
Existing SFR is a 2/1 756 SF
Lot size 5325 SF
Will be delivered vacant!
Price $418,000 – Buyer to take over or buy out the existing solar lease (buy-out it $18,000)- EMD $10,000
Closing February 21

437 W. 111th Place Los Angeles, CA 90061

  • R2 Zoning
  • Existing SFR is a 2/1 876 SF
  • Lot size 7003 SF VACANT!
  • Price $425,000

EMD $10,000

Closing February 10
Both of these properties are in nice neighborhoods of South-Central Los Angeles. Perfect to build new duplexes, add ADU’s, or expand the current SFR’s.

Contact me for showing or make an offer.

Greg@FixandFlippers.com

323-632-3279

Wholesaling and Intro to Fix and Flips


Get Started with No Funds!

I got started in wholesaling by accident, I didn’t even know it was a thing!

Some nice ladies I won’t mention here, helped me get started in this business! I started wholesaling locally in San Diego, but the inventory dried up, leaving me to expand out to Los Angeles, Arizona, Florida, Georgia, and later nationwide. It started with single family fixers, then moved up to luxury homes and non-performing notes.

For many years I’ve earned a living helping investors locate fix and flip and rental properties. You don’t need any experience, you’ll learn as we go.

Before long, you’ll be using industry terms, working on a pipeline of deals and learning from every deal, if you close it or not.

I’ve used these strategies to earn thousands on each successfully closed deal.

One-on-One Mentoring

In 8 modules, I break down a process that will introduce a total newbie to multiple business models: Wholesaling, Co-Wholesaling and Intro to Fix and Flips.

Students will determine what business model makes sense for them, then we will create a business plan that includes a full marketing approach designed to maintain a constant flow of leads.

They will have the skills and resources to go out and close their own wholesale and fix and flip transactions.

I’m always around for questions and guidance beyond the mentoring.

Benefits

  • Learn basics and advanced tactics from 19 year industry vet.
  • Discover how to earn thousands within weeks of getting started.
  • Develop high income lifelong skills.
  • Meet and do business with savvy investors.
  • Get back your time and money to spend with your family and loved ones.
  • Develop into a part-time or full-time investor in 8 weeks.

Course Description

Module 1– Goal Setting and Mindset Development.

  • What are your goals? Dreams, Availability?
  • What is your Timeline?
  • What is your why?

Module 2 – Preparation for Real Estate Investing

  • How credit works and getting ready for investing.
  • Let’s evaluate your personal situation? How is your credit? 
  • Anything holding you back? Let’s address it and face it. 

Module 3 – Getting Started!

  • What is wholesaling?
  • How can you get started with no money ?
  • How can you flip a property with no money?
  • What is 100% financing? How do you get it?

Module 4 – Do you need funds or experience?

  • How will you get funds for flips?
  • How will you get experience?
  • Funding options and how to get your 1st loan.

Module 5 – Your Wholesaler Marketing Plan

  • Marketing   – Blogging, Social Media, Forums, Groups
  • Setting up a WordPress blog, posting and sharing 
  • Building a group, sharing in groups 

Module 6 – Finding Buyers and building your Buyers list

  • Using Craigslist and FB/LinkedIn Groups 
  • What to post to find buyers?
  • How often should you post ?
  • Where should you post ? 

Module 7 – Getting properties to market or wholesale,

  • Virtual wholesaling, Co-Wholesaling 
  • Where do you find properties to sell?
  • What is virtual wholesaling?
  • What is Co-Wholesaling?

Module 8 – Closing and Getting Paid 

  • How to engage with escrow and agents to move the deal along. 
  • How do you ensure you close ?
  • what documents are needed to get paid?

Resource Bundle Includes:

  • Purchase contract
  • Assignment contract 
  • Marketing Quick Start  Guide
  • eBook Study Guides
  • Editable Templates
  • Recorded video of each Module
  • Access to my private MasterMind group.

You will need to research laws in your area regarding wholesaling, in some States, you may need a real estate license. The strategies I teach will work for someone licensed or not.

Get Started Below ↓

$197

Wholesaling and Intro to Fix and Flips

A newbie introduction to wholesaling, co-wholesaling and introduction to Fix and Flips. This 8 week course will educate a completely inexperienced person and give them the insider knowledge, tools, resources and industry best practices to get started in real estate with no money!

$197.00

You will set your training schedule, learn at your pace.

After you enroll, I will immediately contact you to set up a training schedule which includes: Zoom meetings, phone calls and email.

Never feel rushed and we can proceed through each module quick as possible.

See if we’re a fit for each other!

Schedule a call with me

Want to Build 4 homes or 8 apartment units in Central Los Angeles?


Zoned R3 near Korea town, and the Miracle Mile area.

A similar project 2 doors down, the developer is building 4 single-family homes.

There is an existing home there – 3/3 with 2816 SF. the lot is 6632 SF.

The comparable property is 421 S Wilton, that purchase price was $1.45M back in April 2016.

The purchase price is $1.490m

Proforma: Potential to earn $6M from retail sales of 4 single-family homes.

Cost to build estimate: $2.5M

Access is by appt. only.

Contact me for address

Duplex near USC available! Investor Special.


510 E. 48th Street Los Angeles, CA 90011


Here’s a duplex in L.A. near USC! The property is zoned LAR2, and is currently rented at below market rents, which is one reason we obtained the large discount from list price.  The tenants can be relocated with the proper allowance, so take that into account when doing the math.

It’s a very nice street on the north end of South L.A., and has potential to be a great long-term income property once fixed and rented.


Here are the details: 
– existing two units 1/1 up and 2/1 down- 2168 square feet- lot size 5480 sf- EMD is $10,000- closing date is July 23- tenants paying just $500 each ($1000 total)


– Purchase Price is $450,000 (it’s currently listed for $510,000)-

Remodel cost guesstimate $80,000-ARV around $630,000

Learn How To Wholesale Properties from Home!


10200946412133211The market is ripe with opportunity and your chance to get a piece of this pie is only a commitment away. Work with a 13 yr veteran who will show you how to wholesale properties and fix and flip using OPM (and some of your own!)

No experience needed! You will be trained. This is not a Guru “Get Rich Quick” scheme.

It requires a commitment to not quit! Quitters never win.10205999432455561

In this business, if you don’t quit and keep your head in the game, and you learn it, you can earn 6 figures every year.

You will need some tools and some education/direction from a mentor. I’ll teach you how to fish!

Investor/Principal Buyer’s list: has 100+ proven cash buyers for CA properties. $99
Will include a spreadsheet with Name, Email, Phone, and purchase criteria.

Quick Start Marketing Plan – $99
Marketing Guide – white paper
1 hr consulting
Via Skype or Phone, will provide step-by-step instructions on setting up social media accounts: what to post, how to post, when to post, also cross promo opportunities. Also we will go over multiple social media strategies.

WordPress Blog Training – $199
2.5 hrs of Consulting and Services provided
I will set up your WordPress blog
Help with developing content and blog topics
Instruct you on how to use the blog to build an audience, generate leads and establish your brand in this industry.

(Free, included with consulting)
*Documents/Resources
*Assignment of contract
*Purchase Agreement
*Deal analyzer, self populating Excel worksheet
*Access to personal referral list of private lenders
*Contractor referrals

Advanced Consulting

(Private Financing) Strategies $99
Lender Contacts
How to Structure your 1st Private Financing Fix and Flip transaction.
Avoid the pitfalls of bad loans, etc. (don’t lose $$)
*Additional Consulting Sessions –
Create your own agenda (We can discuss any topic that you want) $49/session.

If you purchase multiple sessions, the price is $35/session.

You are welcome to book as many of these as you need. I will provide 1 hr consulting sessions.

Most students use these extra sessions to sharpen skills or ask specific questions not covered.

10204321636311706

Looking for 5 serious students for the summer season!

The HOT season!

Get Started TODAY with all Programs for $399!

Immediate delivery within 24 hrs.

Serious inquiries only
Greg@FixandFlippers.com
858-386-0949

4738703836206

New Private Loan Options Available! Low as 7.99%


Private-Money

After reaching out to the lending community, I’ve been getting some great feedback.

There is HOPE for us investors who fix and flip & buy/hold.

Private lenders who will consider loans with these terms:

 

Pricing: Purchase / Refinance

Clients looking to purchase or refi investment property? We’ve got programs for that!

  • 7.99% at 50% LTV
  • 8.99% at 65% LTV
  • 9.99% at 70% LTV
  • 10.25% at 75% Miami-Commercial-Hard-Money-Lenders.
  • Max Term: 24 Months
  • Min FICO 600
  • Max Loan Amount: $1,500,000
  • 3 Points or Min Fee of $3,500

    Rehab Program

    • 70% of Purchase Price
    • 100% of Rehab Cost
    • Term: 12 months
    • Min FICO: 700

*No Prepayment Penalties
*No Income Qualification
*Excellent Customer Service

Construction  Program

Construction-Loan-Easily75% of Construction Cost

Term: 12 months

Min FICO: 680

 

 

 

Apartment Financing

Loan Amounts- Up to $1.5M

Use our apartment financing to:1300 apartment building construction hard money loan
1. Fix Up
2. 1031 Exchange
3. Buy Other Investment Property

Close in 7-10 days

 

Alt-A Financing

This is a great option for the Self Employed borrower!

Using 24 months bank statements to qualify, They will go down to 500 Fico.

The rates can be around 7%-8% for 1-4 units residential or commercial. 90% LTV.

You must have strong assets for this program.

Buy, Fix & Flip 100% Financing Special

This lender will lend in CA & AZ

They don’t care about bankruptcies, foreclosures or short sales on your credit!

Product Highlights:

100% Financing Buy, Fix & Flip

38da2fbLoan Amount $75K to $1MM (above $1M on case by case basis)

Loan Terms: 6 to 36 months

Rates: 9% to 15% interest only

Origination Fee: 4% to 6%

First Lien Position ONLY

Minimum Credit Score 620

Property Type: SFR, Condos, Town homes, 2-4 Units

Property Value Established through Broker Price Opinion (BPO)

Documentations Needed:

Heavy check mark Last 2 years Tax Returns

Heavy check mark 3 Most Recent Months Bank statements

Heavy check mark LLC or Corporation Documentations

Heavy check mark Purchase Contract

Heavy check mark Interior & Exterior Photos of property

Heavy check mark Estimate of Repairs

Nationwide Fix and Flip Loans!

Property acquisition requires 35% down payment

$30,000 Minimum

Single Family or  1-4 Multi-family

Refinance loans require 50% owner equity in property

Rates for both programs 15%-18%images

Terms are 6 Month@ 15% / 36Month@ 18% / 60 Month@ 18%

Closing Fee $700

States We Currently Serve: 34 States

AL, AR, CO, CT, FL, GA, IA, IL, IN, KY, LA, MD, ME, MI, MO, MS, MT, NC, NH, NJ, NM, NY, OH, OK, PA, SC, TN, TX, UT, VA, WA, WI, WV, WY

States we do NOT lend in: 16 States+ DC

AK, AZ, CA, DE, HI, ID, KS, MA, MN, NE, NV, ND, OR, RI, SD, VT and DC

City and County Restrictions:

IL- Cook County Including Chicago

MI- Detroit, Flint

OH- Cuyahoga County including Cleveland