"Help With Funding" Question!

[dave1962]

I've recently posted a couple of messages inquiring about funding for a couple of our real estate transactions, and I wanted to get some advice from anyone who is willing to offer it.

In my previous postings I mentioned that my partner and I have formed a joint venture and put all the right people in place to help us find a lot of really good discounted properties in our area. We looked at 5 properties on Friday and the last property we looked at has great potential. It is being "Short Saled"

The property has a total market value at 204,000. The list price is at 179,000. The agent that we are working with, who is doing the bank negotiations, said that we could probably offer about 150,000. This property is in a great neighborhood with an elementary school within site of the front door, and a middle school from the back. The high school is less than 1 mile away. It is a 2 story, 2 bed, 2.5 bath, 2 car garage, about 2500 sq. ft.

The only work that needs to be done is cosmetic. There is wallpaper in just about every room. There is also a drop ceiling that needs to come out in the basement. It wasn't done correctly. That's it. We would like to settle in at the 150,000 mark so we have decided to offer 139,000. Our contact feels that this is a good move, as do we.

Before we can submit the offer, we need approval of credit or proof of funds. Usually lenders won't get involved until they can see how the numbers look. We're in a catch-22. We hate to let these deals slip away. Most of the properties that we look at have at least 30,000 to 40,000 equity.

If anyone has an idea of how to get this funded, please let me know!

JDT

[T753]

Hello Dave,

Based on your Credit and/or POF obstacle, you and your business partner need another investor for 'credit enhancement purposes.' Often with credit enhancement this can be a partner 'with a credit line or liquid.' Depending on who you're working with, in addition to the standard USD, Matured CD's, Stocks, and other negotiable instruments, are often acceptable. The key with instruments, 'they must be callable and lien free...' Once you have found this investor 'you'll need to make them a part of your Joint Venture.'

Normally a JPA is drafted with mutually agreed terms that secures all
investor(s). This is a legal instrutment that legally includes all parties. As with any legal document, 'I'd suggest that you consult your licensed attorney and have them draft this instrument.' There are other needed security instrutments that your attorney will advise you of. Once these instruments are in place, 'you're in position to use your new investor's capital for funding acceptance.'

Credit Enhancement Investor's normally will require a piece of the action for their assistance. It's not uncommon for them to receive up to 50% of the equity in the venture. After you've successfully closed a few with this investor, 'you have the option to continue the relationship or not.'

Note: Before you go into a new investor relationship, 'you and your partner should establish if you want this to be a Termed JPA relationship or per project only. Long term relationships often work best when it starts out
'performance based.' From your posting I'm assuming that these opportunities are already at hand, and time is ticking. If this is the case, before you do anything, 'check to what your lender's reserve seasoning requirement is.' Ideally, 'no seasoning should work better for you.' Don't forget to consult your attorney.

I hope this information helps you.

Sincerely,

Timothy

[Randy (SELA)]

A line of credit can be cross-pledged against equity that you may have in other properties. That's what I do.

[The GUY]

Hello Dave,

Based on your Credit and/or POF obstacle, you and your business partner need another investor for 'credit enhancement purposes.' Often with credit enhancement this can be a partner 'with a credit line or liquid.' Depending on who you're working with, in addition to the standard USD, Matured CD's, Stocks, and other negotiable instruments, are often acceptable. The key with instruments, 'they must be callable and lien free...' Once you have found this investor 'you'll need to make them a part of your Joint Venture.'

Normally a JPA is drafted with mutually agreed terms that secures all
investor(s). This is a legal instrutment that legally includes all parties. As with any legal document, 'I'd suggest that you consult your licensed attorney and have them draft this instrument.' There are other needed security instrutments that your attorney will advise you of. Once these instruments are in place, 'you're in position to use your new investor's capital for funding acceptance.'

Credit Enhancement Investor's normally will require a piece of the action for their assistance. It's not uncommon for them to receive up to 50% of the equity in the venture. After you've successfully closed a few with this investor, 'you have the option to continue the relationship or not.'

Note: Before you go into a new investor relationship, 'you and your partner should establish if you want this to be a Termed JPA relationship or per project only. Long term relationships often work best when it starts out
'performance based.' From your posting I'm assuming that these opportunities are already at hand, and time is ticking. If this is the case, before you do anything, 'check to what your lender's reserve seasoning requirement is.' Ideally, 'no seasoning should work better for you.' Don't forget to consult your attorney.

I hope this information helps you.

Sincerely,

Timothy

Ditto and on point!