Looking for financing in PA - first time Investor

[ace-rei]

I am currently looking to start my new venture in REI in PA (Chester County) and was wondering if someone could assist me or point me in the right direction for finding financing.

I have looked at a few of the hard money lenders listed on the left hand side of this site, but have been told by a few of them already that they only lend to 'experienced' or seasoned investors.  Obviously, I am not experienced as I'm just starting out.

Please advise if you would.

Thank you.

[justin0419]

Talk to local banks.  Make a personal financial statement that states all your assets/liabilities with current account balances.  Take in the last three years of tax returns.  Take a current pay statement.  It would also be nice to have a business plan made up.  Even if you don't have the business plan written out, you'll want to have thought about where you want to go with things and be able to speak intelligently about your plans. 
Start your search with regular banks rather than hard money.  See where you get.  There's no reason to pay the higher rates of hard money if you can do something thru a bank for a lower rate.

We have had better luck working with smaller "local" banks than larger corporate ones. 

[ace-rei]

Justin:

Your comments and ideas are highly appreciated and definitely make sense.  I will get all my info together and go visit with the local (smaller) banks and see whereit takes me.

And regarding the business plan, I actually have been putting one together in writing and just about finished.

Thanks again and I'll send you a PM with the results in a few weeks or so.

[Investment Loans]

whats your reasoning behind needing a hml?

what  zip codes?

[hardmoneymikey]

You certainly could talk with your local banks about their investor mortgage programs. 

I am not sure how it is in PA right now, but in FL the small local banks are not writing anything aggressive at all.  In fact, most banks are requiring 20-30% in down payment, plus they want to see reserves, and the money you expect to rehab with etc... 

Of course they also may want to factor your debt ratio's, meaning you will be limited to the amount of propertie3s you could flip at once. 

Dont get me wrong, its best to weigh your options, and the local banks in your area may have aggressive programs.  But Hard Money seems to be a lot more flexible for investors who are looking to flip rehab properties.

If anything you need to talk to your local banks about re-financing you out of hard money if you ever decide to buy and hold.  That is of course if you are looking to buy and hold, and not just fix and flip.

[phlegmaticjay]

Another alternative is to seek out private lenders (not hard money).  Folks with self-directed IRA's, self-directed 401(k)'s, CD's and other "traditional" investments. Some would probably love to make 6-8% interest as opposed to a CD that's only paying 2-4%.  Of course, that is going on the assumption that PA doesn't require them to have a license to lend.  On that assumption, the terms of loan is totally negotiable.  If the PL wants you to put skin in the game then maybe you negotiate 8%.  If they are willing to to go all in for you, then maybe offer them 12%.  (check usury laws)  You just want to make sure you are making the protection of their investment a priority over your profit.  You do them right and they tell their friends and colleagues about they great return you got for them over their IRA, and well, you may not have to look that hard for funds again.   

[moellerryan]

I would definitely try private lenders.  Offer the opportunity to everyone you know.  Have your business plan professionally revised, I have a good and inexpensive source if you want to email me.  Small banks is a great source.  Most important, find a great deal, not a good one, a great one that can withstand all worst case scenarios.  They are out there, the markets in the MidWest and in PA are overflowing with opportunity.  If you illustrate the deal, the risk and put the opportunity if front of enough people you will eventually get the YES you are looking for.  Best of luck.