When funding a deal select the financing with the best rate and terms available to you. You also need to understand this truth:

The better your credit and the greater your level of experience,
the more abundant your options and the less you’ll pay for your loans.

In other words, the options available to you may not be as plentiful or as favorable as those available to another investor; and still may be far better than those available to others.

What investors often do is pass on financing because the rates and terms are not as good as they heard another investor obtained from another source. The question we must ask is whether that better financing is available to us right now. If not…what IS the best financing option available?

Don’t pass on a source funding for a deal simply because of the high cost and tough terms. Instead, consider:

  1. Do you have other options?
  2. Can the deal support the cost of the available funding?

If this is your best option and the deal can support it, isn’t it better to acquire the deal and the experience and make money, rather than pass solely on principle (they have no right to charge such high rates)?

In the end, obtaining funding for your deals comes down to the 3 pillars of financing:

  1. Your credit
  2. Your experience
  3. Your collateral (the deal)

If you have not done a deal and your credit is not the best, that doesn’t mean you can’t fund the deal, it simply means you have to look for alternatives like subject to financing; seller financing; or private lenders. If you have a strong deal you can even find a money partner. They will probably want 75% equity in the deal.

Remember, you’re not in this for the one deal, right? You want to make a business out if it. So if you have to give up 75% profit in a deal to get the experience under your belt, it is worth it. Or maybe you use a hard money lender and they charge you 18% interest and 6 points. It is still worth it to build up your experience for the future.

What if your credit is in the toilet? Again, you still have options. But don’t give up on get better financing for future deals – regardless of how bad your credit appears right now. Credit is fluid – it changes. Make a decision to make it better.

If your credit is OK but nothing special, think about reducing your use of credit to below 30% of available credit. This will have a big impact on your score. Do not close aged credit cards – they show history and improve your score. Be strategic about allowing companies to pull your credit. Do a soft pull of your own credit score (there are many free services like www.CreditKarma.com. Then shop the loans using that score; and once you make a decision allow them to pull your credit once, rather than allow each company to pull one.

If you have a lot of credit card debt, consider working with a credit counseling service who can negotiate reduced interest and a halt on additional fees and a payment structure that works for you. Work hard to get those cards paid off.

To improve your overall credit, consider working with a legitimate and licensed credit repair company like www.NationalCreditCare.com . Their fees are regulated by state law and very affordable.

If you focus on re-building your credit, you can have a significant increase in your credit score in 6 months to a year. While that may sound like a long time if you are looking to fund a deal right now, stay focused on the big picture – that you will be in this business for years. Build your foundation strong over time and your business will grow steadily. A year from now you’ll wish you had started today!

Regardless of your current situation, you have options. Pursue all your options and select the best one available to you now while you work on improving your credit and your experience level. If you stay focused on that, I promise that you will have many more options soon.

Expect abundance,

Lou Castillo