I am trying to buy a foreclosed home for about $290 - $300,000. I either need a personal loan (as in peer to peer to avoid an inquiry on my credit report) of about $5,000.00 (and I will provide the remainder) or an investor willing to partner with me in purchasing the property, although no return would be seen for approximately five years when I would want to sell it. Which is the best scenario and how do I find interested investors? The property has lots of potential and would sell for much more by the time I make some aesthetic improvements. My credit score is good enough; I am just without an adequate down payment.
You have several options. What you seek is an investor who will take a second mortgage interest in your property and will not see repayment for 5 years or more. To find such a person, you need to put out feelers in your circle of friends. You seek someone who will not only invest in the property, but a person who believes in you personally, and that you will put some sweat equity into the property so that there is a good chance of a positive return.
You are also seeking someone who has a fundamental positive outlook on the real estate market in the neighborhood you seek to buy into. You need to seek out and find such a person.
Peer-to-peer (P2P) loans are, as the name suggests, loans between people that are mediated by a third party. In some P2P loans, the borrower writes a proposal and investors choose whether to fund the loan. In other P2P loans, an intermediary funds the loan, combines the loan with others, and sells shares in the loans to investors. Two peer-to-peer lenders are Prosper and Lending Club. (Readers: If you know of others please comment below.)
Consider a P2P loan as an alternative to bank financing.
If you have a 401(k) account, ask your 401(k) plan administrator if loans are allowed under your plan. Not all plans allow loans, or limit loans to certain circumstances. I do not recommend taking a hardship distribution from a 401(k) account unless your situation is dire.
Bills.com makes it easy to compare mortgage offers and different loan types. Visit the Bills.com Loan Resources page to find out more about the loan options available to you.
I hope this information helps you Find. Learn & Save.