The 9 Key Strategies that Every Successful Investor Uses to Finance Their Real Estate Transactions
Without Using a Dime of Their Own Money
by, Richard Odessey
The biggest single challenge most real estate investors have is getting the money to buy property
Sure, there’s finding motivated sellers, negotiating, understanding the laws, etc
But ask yourself: which causes you more anxiety: figuring out how to get more leads, or worrying about where to the money to payoff the lender for the great short sale you just negotiated
If you really want to get the most buying power from the cash you acquire using the strategies listed below, you need to use leverage. That is, to use more than one funding strategy for purchasing a property.
Why? Because these strategies can work synergistically to enhance their power to fund your deals. For example, suppose your paying $100,000 for a property. You secure a low-interest $80,000 bank loan, and bring in $20,000 from a private lender or line of credit. Your overall cost of funds is much lower with the bank loan, and it is a heck of lot easier to secure $20,000 from a private lender, than to find a private lender that will loan the entire $100,000 as a first transaction. And even if you found one, your interest cost would be much higher.
Here are the 9 most successful Strategies for funding deals with none of your own money. For More Information, Click Here.
Þ seller financing – use it for all or part of the equity
Þ Build a Buyers List – no successful investor can ignore this. What better way to assure your profit, if you already have the property sold to a new buyer before, you sign the purchase & sale agreement with the seller.
Þ Hard Money – It's actually easy money – because you don’t have to qualify for the loan, only your property does. These days you can get 60-70% of loan to value, and you can use it for purchase, rehab, interest expenses.
Þ Private Money – Virtually everyone has friends, family and colleagues who could benefit by investing in your real estate projects. Master this technique, and $100,000’s could be in your account in a very short period of time.
Þ Raising Money by the Millions –If you have your sights set on big deals (e.g., multi-million dollar ones), you’ll want to learn how to raise almost unlimited amounts of cash from groups of wealthy investors.
Þ Equity Exchange and Cash Out with Notes –Use notes instead of cash for buying properties, and notes to get more cash when selling properties.
Þ Your Resources – I don’t believe investors should use their own personal cash in their real estate deals. However, there are other resources such as life insurance, credit cards and more. The important thing about this is when you utilize your own resources, managing the money and the repayment is crucial.
Þ The Bank – Banks will often be the cheapest source of money you can get your hands on. And lot’s of it can be yours if you learn the rules and how to play the game. And yes, it is a game, and yes there are winning strategies you can learn and implement.
Commercial Lines of Credit (Chapter 10) – A commercial line of credit is simply a checking account in the name of your business that is funded by the bank up to a certain amount (the credit line). Once you’re approved for one, you can start writing checks for any purpose without further delay or approval up to the amount of the credit line.
To Find out all the details, I’ve created an incredible resource at the Investor Wealth Network. You can find sources for funding short sales, national hard money lenders, private lenders and Angel investors. You can listen to interviews with Private Lenders and their Financial Advisors. And there are articles, templates and forms for business and financial plans, what private lenders are looking for, and much much, more. And you can get in for a ridiculously low discount. Hurry, before I change my mind Click Here to read the details.
R Find a Good Deal – Use the Deal Evaluation Tool
R Assess Risk and Profit
R Decide on a Funding strategy using the Funding Decision Tree
R Secure your funding
R Take Massive Action to Get the Deal Done in the required timeframe
EVERY successful person has a plan
Not just a dream or hope of what they'd like, but a clear vision of where they're going and what it will look like when (not if) they end up there
Then, they have a strategy of how they're going to get from where they are to where they want to be
And finally, they have milestones they need to meet in order to stay on track with their plan
This is the first thing you should do, before you do anything else—no kidding
It will increase your probability of success a hundred fold
This is not a suggestion
It is a requirement
Stay away from any deal where the profit margin is thin, or requires some luck to be profitable
When doing a real estate transaction there are too many things that can or will go wrong
If you aren't comfortable with the outcome, even in a worst case scenario, Don't Do It!
You need to do some number crunching here
Risks relate to condition of the property, costs to fix it up, where it’s located, how long it might take to sell and the cost of financing the deal
If you’re getting the property for a big discount, it’s in a great area and needs only a light rehab, your profit looks good because the risk factor is low
Once you've gotten the numbers, use the Deal Evaluation Tool (excel spreadsheet) to project your costs and profit
This tool will cover most situations
It will also allow you to change any of the parameters to fit your deal
And you can also model the outcome of various "what if scenarios"
In addition to doing the math, certain parameters are built in to help you evaluate whether your proposal is financially sound
If not, the tool will give you suggestions on how to improve it
This is one tool you should never do a deal without!
If you follow these guidelines, you will have a bigger bank account, a lower stress level and a happier family
- banks: low interest rates, difficult to qualify, slow to approve
- private money: negotiable terms, reasonable rates, sometimes pay the full amount
- hard money: higher rates, experienced investors
- seller financing: widens buyer pool, ensures quick sale
For more Information and Free Webinars: go to: investingwiththestars.net/season2