- Finding money to do a deal is easy if the deal is a good one
- Fort Hood is probably oriented more toward long term rentals / buy and hold deals
What is it
Hard money is short term financing at a very high interest rate (usually 12-15%). These are designed for flip-type projects that you are only going to hold onto for a few months at most before reselling. Because hard money is expensive, you need to know what you are doing to avoid costly delays, and a big profit cushion to absorb some of the lending costs. Some lenders allow you to convert a hard money loan into a long term loan.
If interested in flipping or “whole-tailing”, be sure to check out the Bigger Pockets Flip Calculator.
Where to find it
Hard money can actually be difficult in the Fort Hood area. Many major hard money lenders want to be within a 50 or 60 mile radius of a major metroplex like Chicago or Dallas. Killeen is just outside of that radius for Austin, and therefore some hard money folks are uninterested. DHLC Investments out of Dallas is the only hard money company I am aware of that will do projects in the Fort Hood area.
What is it
Commercial lenders lend on commercial properties – apartments (5 units or more), retail space, industrial complexes, restaurants, etc.
They also can help you refinance a property for which you paid cash, and might be especially helpful for those pursuing the “BRRRR” strategy. Obviously, be sure to check out the Bigger Pockets BRRRR Calculator.
Unlike 1-4 family residential loans, commercial loans tend to be more creative, including adjustable rate mortgages (ARMs) and balloon payments. Unlike 1-4 family residential loans, they are far less interested in your finances (debt-to-income ratios, income, etc) than they are the underlying collateral (the property).
Where to find it
Commercial lenders like forming long term relationships with their clients, and vice versa. If you have a small town bank or credit union you belong to, I would start there. Here in Killeen and the Fort Hood area, I know a BRRRR investor who uses Extraco banks for his refinances, so you may want to start there.
1-4 Family Rentals
If you are just looking for SFH (single family home) or MFH (multi-family home) rentals with less than 5 units, you don’t need a costly commercial loan. You can just get a normal residential loan for investor financing. The terms and process is usually very similar to an owner occupant home loan, except you can expect a higher minimum down payment (20-25%) and slightly higher interest rates.
How to Choose a Lender
- Don’t just look at rates; Lenders can manipulate rates
- Get the Loan Estimates from multiple lenders to compare apples to apples
- Local lenders are often better prepared and resourceful than online lenders
Private Money and Money Partners
What is it
Private money is like hard money, except the money comes from someone you have a personal relationship with. This can be a friend or family member, but preferably it is an experienced investor, mentor, and/or partner. Especially wholeseller investors, who need to have someone else to buy their contracts, this is an important resource for them. Be sure to check out the Bigger Pockets Wholesale Calculator.
Finding a money partner can intimidate newer investors. Some feel like they need to have a “cash buyer list” before they even start trying to find a property. That is foolishness! If you can find a quality deal, finding the money to make it happen will be easy.
Where do I find it
I highly recommend attending the auction if you are getting started in investing. Investors with deep pockets show up to these, the Bell County one especially. It can be a great place to network and locate folks who can partner with you on a worthy deal.
The auction is the first Tuesday of every month starting at 10 AM.
Bell County Auction
(Killeen, Harker Heights, Belton, Temple)
Bell County Justice Center
1201 Huey Dr, Belton, TX 76513
1st Tuesday every month, located outdoors near the main entrance
Coryell County Auction
(Copperas Cove, Gatesville)
Coryell County Courthouse
620 E Main St B, Gatesville, TX 76528
1st Tuesday every month, located outdoors on north door of the courthouse
County Appraisal District
It might take some tedious copying and pasting, but you can use the appraisal district to look up folks who own multiple homes in your target market. Pick a street in a neighborhood you are prospecting, and quickly search owner names to see if there are any who own multiple addresses. Or, to get through more quickly, just scan through looking for LLCs or other incorporated property owners. You’ll have a name and mailing address at that point, and already in touch with someone who owns and probably likes property where you are targeting.
The MLS can be handy for spotting investors who are buying up multiple multi-families or foreclosures – investor friendly property types that make their way to the MLS. The list of recently sold multi-families and foreclosures is not super-long. It is possible to quickly look through and identify folks who are in the market for properties now. Most Realtors, investor friendly or not, who know their way around the MLS should be able to get you a list without much effort.
- Search Facebook for local investor groups (some may be closed, private or secret, however, and need an invite)
- Check out local Meetups (like ours here)
- Go to local clubs, like the Austin RENC
- Get a profile on Bigger Pockets and search / post on forums. You can set up an alert with the cities you are interested in, so you hear whenever someone is talking about your area.
- Ask local title companies (like Netco) if they have relationships with investors that they would be willing to connect you with. Better yet, ask if they know anyone looking to sell properties. Maybe you can find a money partner and a deal!
Flipping in the Fort Hood Area
- Flipping can be done in Killeen
- But the MLS is probably not the lead source
- Most flips are bought with target ARVs around $90,000-$160,000
There are lots of options for financing for an investor. The trick is finding a great deal. In my experience, you won’t have many issues getting the money sorted if the deal is solid. Don’t be shy! The investors I’ve seen succeed are aggressive and go out and make things happen.