Hard Money in Real Estate Funding

Hard Money in Real Estate Funding

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.


Get Home Loans With Bad Credit: Online Lenders Can Help You Succeed

For many citizens, the chance to own a home is not something to pass up. Owning a home is the best way to build wealth over time and a true measure of a person’s accomplishments. However finding home loans with bad credit may make this chance more elusive than ever. For borrowers with poor credit, home loans may seem like just another dream. However, there are ways to get the mortgage loan you need through online lenders who specialize in high risk lending.

Credit Is Still Important

Many people wonder why a simple three-digit score is so important when trying to buy a home. It’s just a number after all, right? Wrong. The Fair Isaac Corp. (shortened as FICO) developed the credit scoring system as a means to help lenders assess the likelihood of default on loans. The system take several aspects of your credit: your asset to debt ratio, your past history of repayments, bankruptcies, foreclosures, etc. and uses that to generate a score that tells lenders a lot about you with little fuss.

Basically, the point of a credit score is to serve as a short cut for borrower evaluation. Bad credit means that the borrower has had problems with money in the past and may have problems in the future. Therefore, when looking for a home loan, poor credit is an important element that a lender will use to assess whether or not you will be able and willing to repay the loan on time and in good standing. If you do not do this, the lender loses money.

Lenders Willing to Take the Risk

Even if you have reformed bad habits or, worse, your poor credit score is a result of factors out of your control (such as lay-offs or medical bills) most traditional lenders will still consider you a rick when considering you for a home loan. With bad credit, no matter the reason for that poor credit, you are at a disadvantage with most lenders.

There are clear exceptions to this rule, however. Many lenders who operate online are willing to work with people whose credit scores are lower than ideal. Why? Many of these lenders understand that in cases where bad credit is a thing of the past, a second (or even third) chance is warranted. These lenders will give home loans to those with bad credit because they believe you have the ability and willpower to succeed.

There Are Still Penalties

This does not mean that you are on even playing ground with other borrowers however. Because of your bad credit, home loans will come with certain penalties or other circumstances that will offset the risk your bad credit creates. Principally, this means that your interest rate will be higher than those low rates you see advertised all the time. There may also be certain fees for late or missed payments that are higher than those on traditional loans. It is important to read all the fine print on your final loan papers in order to understand all of these circumstances.

The good news is that borrowers with bad credit can still get home loans. With poor credit, it is easy to get discouraged, but it is not necessary. Consider all the options in front of you and start your search today!


VA Home Loans With Bad Credit: Special Qualifications and Tips

Serving the country as a member of the armed forces comes with many benefits. The 1944 Serviceman’s Readjustment Act, which many also know by the term GI Bill, was created to help armed forces veterans to get ahead after their service time has ended. One such benefit offered by the GI Bill is VA home loan assistance. This program allows vets to purchase a home with a low or minimal down payment. The VA will guarantee 25% of the loan instead. Also, those with bad credit are also able to find relief through VA loans.

Get a VA Loan: Meeting the Qualifications

The benefit of the VA home loan received through the Serviceman’s Readjustment Act (GI Bill) is that there is a guarantee from the department of Veteran’s Affairs (VA). This guarantee eliminates much of the risk associated with bad credit loans or low down payments. You can get a VA home loan with bad credit. However there are specific criteria that you need to meet as well. These qualifications include the following:

• No history of loan default within the last twelve months. Defaults in the distant past, though considered, can be disregarded if you have proven that you have reformed from your past mistakes.

• No bankruptcies on file in the past two years. Again, a bankruptcy on record will matter, but if you have made changes and allowed at least two years to pass, you can still get a VA home loan.

• Proof of current, gainful employment with a steady and reliable income. You need to display that you have the ability to pay for the home loan you seek.

Disabled Veterans

Armed service veterans who are currently disabled and receiving benefits due to their disability may still qualify for VA home loans with bad credit. This is because there are special additional programs that are offered for disabled vets. By speaking with a VA loan professional, you can see if you are able to get a VA loan with bad credit as a disabled veteran.

Improving Your Credit Score

Among the most important steps to take before applying for VA loans is making changes in your personal financial habits in order to increase the credit score you currently have. Simple steps that you can take in order to achieve this include consolidating debts and setting a clear budget to follow each month. Also, make sure that you have each month’s payments clearly marked on your calendar in order to avoid late payments that may make a bad credit score go down even more.


How to Finance Your Property Purchase With a Bad Credit Loan

When making that first major purchase like a car or your first property, personal credit is used to secure the finance necessary to complete the sale. But over time, as we stretch ourselves financially to maintain an adequate standard of living, circumstances can affect the strength of our credit.

If you’re looking to refinance your existing mortgage to get cash equity out of your property but you are a little worried as to whether you’ll qualify because of weak credit status, there is what is called bad credit mortgages available for people with similar circumstances.

Bad credit mortgage loans are known by the financial term sub-prime home loans and are offered by selected group of lenders who specialise in these types of mortgage loans.

These lenders have different lending criteria which do not follow the same rigid guidelines as traditional mortgage loans obtained at banks or credit unions.

Lenders in the sub-prime sector allow for credit problems that traditional lenders would not normally consider. What this means for borrowers with a shaky credit history is that an application for a sub-prime mortgage loan would have a good chance of receiving approval, even in instances of poor credit history.

Sub-prime mortgage lenders actively seek out potential clients with poor credit of which there is a large pool of funds made available.

People who have had bankruptcy, foreclosure judgements, late payments or collection accounts in their credit file are all eligible applicants for sub-prime mortgage loans.

The severity of your credit history will determine the interest rate you will pay with sub-prime mortgage loan, which will be higher than the traditional convention loan.

Bad credit mortgage loans can be used by people with a history of poor credit as a way to rebuild their credit profile. Over time, roughly two to three years, once credit is re-established and their credit score is higher, they are able to refinance at the lower rate conventional loan.

Not all lenders will make sub-prime loans, so knowing if a prospective lender offers sub-primes is important because not only will you save time, but it will also prevent pointless enquiries into your credit report. Having multiple enquiries by different lenders could work against you if a potential lender finds you have been unsuccessful in your previous attempts.

Having a shaky patch in your credit file should not be a deterrent to investing in property or obtaining the necessary financing. It may be a little more costly to obtain your loan, but by no means impossible.


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