I’m sitting quietly in my office thinking about a few Real Estate Deals I’m working on and was going through the different funding sources that are available to me for them, when I thought I’d write up a quick blog post and bring you up to speed on them and some late breaking important news.
I just got a land deal accepted and all the due diligence taken care of, including some environmental issues. This one is ready to fund and close and I’m excited about it because it’s a really good deal.
I’ve also got a few residential deals going that are about to close and also require funding.
The funding sources that are available in today’s market, as I see it are:
– Your own cash (and not many have the wherewithal)
– Banks (a great place to go if you want to be tortured and probed prior to them telling you they’re not lending, especially if you “need” the money)
– Transactional Funding (the industry topping funding we do in here)
– Hard Money (and your credit better be perfect and you’ll need to have 10% – 20% to put in the deal, then… you’ll learn why they call them “hard” money lenders)
– Taking over the seller’s mortgage (when there’s equity and they’ll let you do it)
– And last, but not least, private lenders (regular folks looking for a better return on their money in a safe environment)
Which type you’ll use will depend a lot on the nature of the deal. Let me break that down for you.
Your Cash… you should only use that when you are planning to resell or refi right away. You don’t want to tie up your liquidity long term. I hope this is obvious. This only applies if you HAVE cash in hand of course.
Banks… you should only go to the bank if you’re prepared to receive a financial-oscopy and, if you’re self employed, to be treated like criminal that is guilty until proven innocent. Then, if you can actually get them to lend you money, you’d use it on deals you plan to hold long term. To use banks for flip deals is torture on you and bothersome to them.
Transactional Funding… We have a funding program on STEROIDS as you probably know, and the cost is DIRT cheap. If you are not aware of the hundreds and hundreds of times we’ve helped our customers create BIG pay days by funding their deals, you should acquaint yourself with it. You don’t need any money or credit to qualify and the market is ripe for it. You can learn about it at www.FundAFlip.com. This type of funding is only for flip deals where you’re buying and reselling immediately, without doing repairs, and selling to a cash paying investor, rehabber or landlord. Wholesaling, as it’s commonly referred to.
Hard Money… you should only use this when you are rehabbing. It’s very expensive, requires (in today’s market) you to have decent, if not great, credit and (in almost all cases) you to put quite a bit of your own money in the deal. So, if you’re lacking credit or cash, this really isn’t an option – again, in today’s market. There was a time where your credit didn’t matter and you could go in with no money of your own. Those days are long gone.
Taking over a sellers mortgage… also known as “subject to”. This works when you want to either hold the property or flip it to an end user buyer. This only works when the seller has equity they’re wiling to walk away from and when they’re comfortable with you taking over (NOT assuming) their mortgage.
Private Lenders… ahhh Private Lenders. I love private lenders. I’m sitting in an office building right now funded by a private lender. I have rental houses in FL that were funded by privates lenders. I’ve done rehabs funded by private lenders, and back when I didn’t have the cash my self, I also used private lenders for short term wholesale flip deals. I’ve used private lenders for just about every type of deal there is – both residential and commercial. They’re versatile, negotiable, reasonable, usually don’t care about your credit, and if the deal is right, will fund 100% – or in some cases more than 100% of the purchase price. They’re awesome, and I love them. In fact, if it weren’t for private lenders, I know I would not be where I am today.
The trick is finding them. I can’t count how many times, over the years I’ve been asked, “Hey… who are your private lenders? Can you give me their contact info?”. I’ve always kind of laughed at that question because it seems funny to me that someone would even ask. It’s kind of like someone asking if they could use your tooth brush. YUK! But seriously. Private Lenders are private individuals, yes, but… they’re also PRIVATE! Mine are mine, yours will be yours…. go get your own!
The hard part is… Who do you ask, what do you say, what terms are they looking for. In the past, I’ve just sort of winged it, and really let the deal in hand do the “talking” for me. When it’s a good deal, believe me, it speaks loudly.
Now you know that I’ve been at this business for just shy of 20 years, and I’ve done and seen (just about) it all. So that makes it easy for me to find and work with private lenders. Heck they find me! But this isn’t about me. It’s about YOU!
How will you find and work with private lenders? I’ve been asking myself that question, over and over, for years. How can I help YOU find the private lenders you need to fund your deals?
Well I finally figured it out. It took just over 2 years of pushing, pulling, negotiating, combining sources, massive technology and BAM!!, I’ve got the solution. It’s called the “Private Lender Data Feed” and it’s about to ROCK YOUR WORLD!
The PLDF (for short) is where you have access to known private lenders, who have just made a private loan on Real Estate, all over the USA, including your back yard, and anywhere else you do, or want to do, business.
With the Private Lender Data Feed, you’ll never wonder where the private lenders are, and you’ll never need to convince them they need to be a private lender… they ALREADY ARE!
BTW, that data costs me a fortune to acquire, from multiple sources and we add 6,000 to 8,000 new private lenders each month. They are folks who made a private loan on real estate during the previous month. So, each month the system is updated with the most recent, new and repeat, private lenders.
Let me know what you think about this. Please leave your comments below. I want to hear from you so please feel free to chime in.