One 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 any money lying around in CDs or money markets or 401 ( K ) s that are not getting a good interest rate ? Or , 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 a pretty conservative risk ?
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 .
A lot of people who would be interested in becoming private lenders and earning a higher interest rate on their hard earned money don ’ t even know the opportunity exists until you tell them about it . Other ways to locate private lenders would be through your local real estate clubs , REALTORS ®, or mortgage brokers . These folks usually work with or know of private lenders who are looking to fund deals . At your local real estate club , there are probably lenders there just waiting to loan you money for your deals . These are the folks who are savvy enough to know where to find investors who need money to fund deals . Very often REALTORS ® work with investors who have money to lend and will match them with a client who is an investor , who is trying to purchase a really great deal . This is a winwin for everyone involved . You also need to tell everyone you know or meet what you do for a living and that you use private lenders to fund your deals . You just don ’ t know who has money available to lend to you . I actually got a new private lender for my business while having my nails done at a local nail salon , so don ’ t be afraid to talk about what you do and how you can help folks get a better interest rate on their money .
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