Investing in real estate is definitely money out. However, it doesn't mean that you can't invest in real estate if you don't have cash at hand. In cases when people don't have money to invest in things such as property, there are ways to raise money without it coming from your own pockets. Enumerated and discussed here are possible persons that can help you with finding the money for your real estate investing.
Best Friend #1: The Owner
Surprising as it may seem, the actual seller from whom you intend to buy the property from may turn out to be your investor. The seller may agree to monthly installments for payment you owe him after you are able to sell the property. Of course, to act as interest a certain percentage of the profits will be asked of you in addition to the original amount of the property for sale.
Whichever you end up choosing as your source of funding; be sure that your financial projections and your cash flow scheme will be good enough for your chosen investor. This way, you'll find funding in no time!
Best Friend #2: The Temporary Partner
These are the people with the dough but don't want to invest the money themselves. An agreement such as partaking with them a percentage of the profits will be a good deal for both parties. Just make sure that the necessary paperwork will also be done as you would do if it were a bank who gave you the money. Also, necessary contracts with assigned signatories must be filled out and made available.
Tip: Do your assignment well and be ready to have the necessary figures to back you up when you present to a prospective private investor. Make sure that accurate financial forecasts will be made so as to keep expectations in check. The more researched your study is, the more likely you'll be able to gain the trust and confidence of a private investor.
Best Friend#3: The Bank
You might have overlooked this. We're talking here about your business unsecured line of credit. It's not reported on your credit. It does not a ffect your credit score and it's readily available to use. To qualify you need to be in business for at least 6 months, have a paydex score, and have a personal credit score over 680. To get your paydex score, register at dnb.com. This may very well be your best option if you were able to maintain a good credit record. Moreover, the better your credit record is the better your chances to negotiate for a low interest deal with the bank.
Best Friend #4: The Hard Money Lenders
This source of funding focuses on real estate lending. Normally, these lending institutions can lend you a good percentage of the After Repair Value (ARV). One drawback of this though is the high interest rates that go with it. You might be able to get the funds you need fast, but your projected profits will be lessened quite significantly as compared to borrowing from other lending institutions. Unlike banks though, these companies work real fast.
Copyright (c) 2007 Jacques Coquerel
As the stock market tumbles and a most mortgage lenders go out of business how does the average guy manage to continue to invest in real estate. We certain will not be able to get traditional mortgages from banks or lenders as they now require 800+ credit scores, personal guarantees and down payment collateral equal to or greater than 40% of the purchase price. hard money lenders are so scared they will not lend to their own mothers - that is, the few that are still in business.
So what do real estate investor do now!
Private real estate money is the answer. So what is private real estate money and how do i get it to purchase real estate investments.
Private real estate money is simply borrowing money directly from private individuals rather than a bank or other commercial lender. Private lenders tend to be ordinary people such as doctors, lawyers, accountants, business owners and possible retired people. Most private lenders are simply looking for better investment returns than they can typically get from bank CD's, money markets or even bond investments. Over the past couple years these type investments have yielded a paltry 3% to 6% pretax rates. Real estate investor can pay private lenders in the 9% to 15% range for their money to invest in real estate. So it is easy to see why they will be interested in investing in your real estate investments to get that kind of return on their money.
Private real estate money lenders will want to know several things about a property before they will invest. The questions most private real estate money lenders are going to want to know about your investment include:
1. What is the purchase price?
2. How much is the property worth once fixed up and rehabilitated?
3. How much will it cost to fix the property up?
4. How much do you want to borrow?
5. What is your exit strategy i.e. do plan to flip to a first time buyer or hold to rent?
6. When will you pay off the private investor
You may want to have a short little presentation book or business plan laid out in a professional looking format to present to a private lender that addresses these issues. The booklet or packet will allow you to show the investor what your plans and will show you have well thought out plan.
In this new era of real estate investing you need to look to new and different ways to financing your real estate interments and private real estate money will be key to your investing future.
Both Jacques Coquerel & Michel Lautensack are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jacques Coquerel has sinced written about articles on various topics from Property Investment, Finances and Make Money Online. Jacques Coquerel is a real estate investor based in Atlanta, Georgia. He has made more than 750 transactions since 1996. You may visit one of his sites