Financing your Deals Creatively
Even if you are exclusively wholesaling, you should have available avenues to fund deals because you never know when you may need them. The only way most people know how to borrow money is through the banks. Unfortunately, the banks have many rules and limits regarding the loans they give. You will unquestionably need good credit to take out a loan for a house, or if you don't you will be paying thousands of dollars extra in interest if you end up qualifying. This is obviously not the kind of financing we want for our deals.
A hard money lender will qualify the property instead of the person. Hard money lenders know what the investing world is all about. If you bring them a deal that works, they will recognize it as well and be willing to fund your deal. Hard money can be very expensive with the high interest rates, but if getting the money allows you to do a deal which could not be done otherwise, we would consider this a win.
Private money from individuals is even more ideal. These individuals can be your friends and family who don't want to do the work of investing in real estate themselves, but they want their money to grow interest. Basically, these individuals become the bank, and the loan is secured just like any other loan. Lower interest rates can also be negotiated for your benefit, even though these people will be getting a better return than they would in any other traditional interest-bearing account.
Finding these lenders is essential to your business if you want it to keep growing. So, network, network, network!
These people will be at your local REI Clubs, and they will be looking for people to invest with. Don't miss these opportunities.
Please read on about creative financing by clicking the article below by Reggie Brooks who has been investing since 1986. He explains many other ways to finance your deals creatively.