REI Wealth Magazine Featuring Paul Finck | Page 40
O
ne of the most important resources any
real estate investor needs in their
business is the cash to fund their deals.
But where is this cash going to come
from? Where are you going to find a
source for unlimited cash so you can fund your deals,
therefore allowing you to purchase all the properties you
want? Once you implement a solid marketing plan and
you have motivated sellers and deals coming into your
pipeline, then funding your deals becomes the next big
step in your business plan.
You certainly don’t want to go to a bank for it. You
will have to fill out a lot of paperwork and wait weeks to
find out if you’re approved. The biggest problem with
this method is that while you are waiting to be approved,
someone else who can close more quickly using private
funds will get the deal you were looking at and make all
the profits from it. So where should you get the money
to fund your deals?
The answer to this question is simple; private
lenders. So what is a private lender and how are you
going to find these folks to fund your deals? Private
lenders are ordinary people, they are all around you.
You just have to find them. A private lender is anyone
who will loan you money to fund your deals. There is no
credit check involved and generally no fees. Their
investment is guaranteed by a mortgage on the property
you are purchasing plus the insurance on the property.
Generally the loan to value on these mortgages is about
6570%. Therefore, you can obtain the money to fund
your deals no matter what your personal financial
situation might be. If you are working with truly
motivated sellers, it should be fairly easy for you find
deals that fit these parameters.
It is fairly easy to find private lenders. The first thing
you need to do is to look around you. Do you have
relatives, friends or professionals that you know who
have money lying around in CDs or money markets or
401K’s that are not getting a good interest rate, or
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maybe you know someone who just inherited some
money and they need to invest it. Since you are going to
pay them anywhere from six to ten percent interest on
their money, they will be very interested in talking to you
about loaning you the money you need. And once again,
their investment is guaranteed by a mortgage on the
property and by the insurance you keep on the property.
So even if you defaulted on the loan, their investment
would still be protected by the value of the property, so
it’s a winwin for you and your lenders. Where else can
they get a great rate of return on an investment that one
would say is pretty conservative risk wise?
And remember, for you, it’s not the cost of the money
that is important; it is the availability of money that is
important. Without the influx of ready cash into your
business for purchasing new properties and getting rehab
completed, you will be unable to take your business to
the next level.