Real estate funding is crucial to your real estate investing success, and contrary to popular belief it’s really not that hard to find the money.
I believe the number one most frequently asked question for a newbie investor is “were do I find the money to fund my real estate deals.” This is perhaps the biggest concern if not the main concern newbie investors face when starting to invest in property.
Believe it or not it’s actually easier than you think to fund most if not all your investment properties, even in today’s tough economy, with no credit, bad credit, little money, or no money.
You literally have access to over $1,000,000, if you know where to find it of course. The problem is most new comers don’t take the time to educate themselves in the importance of finding, funding, fixing, and flipping deals correctly.
Let me explain how the system works…
Most of you go out and try to find the money first and what happens next is you have absolutely no leverage. While you might have a sound proof plan you still have nothing to leverage it with.
Most private investors, at least the one’s I’m going to be teaching you about need to see a property first.
Why? It’s simple, having the property in contract is going to give you the leverage you need, but it can’t just be any property out there. You have to buy right. Meaning you must purchase the property at a wholesale price. This will determine if you’ll get real estate funding for your deal or not.
I can imagine what most of you may already be thinking. “How can I buy a property if I don’t have any money or credit, it’s just not possible.” How wrong you are.
Find the deal first and the money will come. I can almost Guarantee it.
Understanding how to find the deal first will give you leverage to fund all your deals.
Let me give you an example of what a good deal should looks like.
It’s a secret most newbie investors struggle with when learning how to buy a property because they simply just don’t know how much to pay for a property. I like to call it the 65% Rule. What is the 65% rule? The 65% rule means you don’t offer to purchase an investment property for more than 65% of the fair market value.
So let’s just say you found a distressed property that you know once it’s been rehabbed is worth $100,000 fair market value.
By using the 65% rule you would multiply it by $100,000 or $100,000 x.65 which would equal to $65,000.
In the example above I would offer no more than $65,000 for the distressed property. This leaves you a safety net and a potential profit margin of 35% or $35,000 not including closing costs.
Can you see your leverage power now!
Do you understand how powerful the 65% rule is. Now you see why I’m telling you to first find the deal in order to acquire real estate funding. By following the 65% rule you can acquire real estate funding with little or no money and no credit or even bad credit. I bet you’re wondering who these lenders are right about now?
These lenders are what we investors call hard money lenders.
Unlike the traditional banks that want to check your credit and your income, hard money lenders lend you money based on the property and not you personally.