How You Can Get 100% of Your Real Estate Investment Deals Funded
Many real estate investors have piles of money to play with. However, this is not the norm. Even if you have nearly unlimited funds, you may not want to use that money to buy and rehab homes. Instead, a lot of people who fix and flip real estate skip traditional financing methods in favor of a more agile option.
The Benefits of Private Money Lenders
When you are working with real estate, you want to be able to move quickly. Traditional financing options don’t allow the flexibility you want and need. Fortunately, it’s possible to leverage deals that you don’t have cash for by using other people’s money. In fact, it’s a tried-and-true method for getting your real estate deals funded and making your investors very happy with returns between 8 percent and 12 percent.
By building relationships with private money lenders, you can access funds on an as-needed basis. Credit scores matter less than a solid track record of flipping with these investors. Of course, they’ll want a deed of trust on the property for security, but their priority is making a profit on their investment.
If you haven’t built a reputation as a trustworthy and successful fix-and-flip professional, there are a few things you can do to create a network of support with your circle of friends, coworkers and family. This network can help you get started, even if other forms of financing aren’t readily available.
First, make sure the people you regularly interact with know about your projects. People love before and after shots of homes. Whether they have any interest in real estate investing, design or rehabbing homes, it’s fun to see the transformation.
Having a few individuals who understand your goals and are willing to help you get started by providing much-needed funding is crucial to your potential success. Start by letting the people closest to you know about your plans. They may be able and willing to help by either lending you money or by making introductions to people who may have interest in real estate investing opportunities.
Be sure to take high-quality before and after photos of your properties and share them on social media. Occasionally mention that you are always excited to welcome new investors so you can expand.
How Private Money Lenders Make Fixing and Flipping Real Estate Possible
Launching and supporting any new business presents challenges. Many people new to the fixing and flipping scene spend a great deal of time finding and evaluating property, but don’t put much thought and effort into setting up a network of investors that can help them with everything from earnest money to equity capital. However, non-institutional lenders make ideal real estate investors.
Even if you have great credit and can get a conventional loan, you may find that the flexibility offered by a personal connection better supports the nature of fixing and flipping than a traditional bank can. Growing your group of potential investors also gives you access to a nearly unlimited funding source.
As the number of your successful projects increases, so will the confidence of your investors. Your track record is an important part of gaining access to a larger circle of investors.
After all, you’ll make a lot more money if you have access to more buying power.