The results from last week’s survey are in and the overwhelming response was you want to know more about funding for your deals.
I’m going to discuss how to fund your deals here, but first let’s discuss why should consider not funding your deals.
My advice to all my personal mentoring clients when I start working with them is: Let’s create cash flow before we take on liability.
The wholesaling strategy provides you with significant monthly profits without having to purchase the property. And with the Wholesale Pretty Houses strategy you don’t even need a list of investor buyers to get your houses sold quickly.
Once you have steady, predictable cash flow coming in from wholesaling, then you’ll want to consider purchasing properties. Many of the economic indicators I am reading suggest that the housing market is showing signs of recovery and appreciation is likely.
Take advantage by renovating and reselling for large profits and by building your rental portfolio.
Both of these strategies require funding, and you can fund properties to cover 100% of project costs without using your own cash or your own credit.
Sure, you can use traditional funding sources such as banks, equity lines of credit, commercial funding, etc. Let’s look at some more creative solutions.
I purchased my first property with a money partner. I had no other resources, so I found a money partner. The profit split was awful: 75%/25% and not in my favor. On the other hand: 25% of something is better than 100% of nothing. The big advantage was no monthly payments and no liability for the money. Look for someone who has the money and not the time. It’s a good match.
Next are hard money lenders. I prefer to use local lenders rather than the large national ones. The interest and points can be painful, but they loan on rehabs; will loan for repairs; and close quickly (1-2 weeks). They are so abundant all you need to do is an internet search for “hard money lenders”.
Seller financing is often overlooked due to the belief that every seller needs all of the funds up front. When you realize that your purchase price will be significantly above their loan balance, find out their plans for any cash they receive at closing. If they don’t have concrete plans other than put it in a low yield vehicle offer that you could pay a little more for their property if they could help with the financing. You’ll be amazed at how many sellers say OK and you get low cost financing.
Don’t overlook the existing financing as well. Purchasing “subject to” the existing mortgage can eliminate the need for the majority of the funding on a property. I especially love this financing for rentals as it provides built-in long term financing.
Finally, the way to have unlimited access to funds for all of your real estate projects is with private lenders. These are everyday individuals with money in low yield vehicles like bank accounts; CDs; and IRAs. IRA funds are a great source with private lenders because most do not realize that they can rollover their funds to a Self Directed IRA with no penalty and start making real estate loans where they will earn 8-10% compared to the 1-2% they currently own.
If you are purchasing real estate and don’t have private lenders, you really need to build a portfolio of lenders. They are loyal; flexible; and offer great rates with easy qualification.
It is true…you really can buy real estate with no money. Well…you need money…it just doesn’t need to be yours.
Expect abundance,
Lou Castillo
P.S. Remember to start by creating significant steady monthly revenue. Wholesaling Pretty Houses is a low risk and inexpensive way to achieve that. Click here to learn more
