Getting Help with Financing

Money makes the world go around. It takes money to make money. Money can't buy happiness...but you sure can rent it for a while. All of these saying are common things people think about money. If you want more money people think it is because you are greedy. Actually, money builds security, comfort, and a way to spend more time with family and friends. In real estate investing, there are few deals that can be done without money. The part I like to deal with is OPM--other people's money.

If you structure a deal to purchase a home, you need to come up with earnest money, a down payment, a loan, and closing costs. Earnest money can be yours since it is usually a small sum. A down payment and the closing costs can come from investors, friends, family, or partners. The loan is obviously money from somebody else. After all, it is a loan.


Where does all this money come from? As I said, your family, friends, investors, and/or partners. Depending on the source of this money, it will have a different cost to acquire. Family can be very low to no interest rate depending on the family member. Friends can have a small interest rate to help with the risk of investing. Partners will be even higher since they are still carrying part of the risk. Investors will charge quite a large rate since they are trusting a stranger they do not know very well. If all else fails, you can go to a hard money lender which will charge the most as well as points (a percentage of the loan) as he or she are the ones getting the investors together to fund your project. There is always a combination of the above as well.



Some experts agree that if you find the deals, you will find the money. This is true if you have a great deal and you have a network of people willing to give you money for your deals. Once you gain an understanding of the amounts of interest you can charge, you will see that you will eventually be able to show that you do have the ability to come through on the project and they will be paid not only their interest but their principle investment as well. Since the cost of this money is lower as you start with family and work your way to hard money, you need to focus on the cheaper sources first. Once you have enough money, the hard money lenders will always be there since you need to have at least a portion of your own money in the game for them to play.


As I find deals that can be a good venture, I send out the details to my twitter friends. With a few good words included, you can get more followers to see your deals and to get the word out. Also, there is a great list of investment clubs on http://www.reiclub.com, or http://www.creonline.com/clubs.htm. These are two of the best lists out there. You can also Google the terms and find more clubs. Going to the meetings, getting to know the members, and asking questions, will help you find those that are good sources of funds or friends.


Remember, once you get the first deal funded and closed, you need to use some of that money to help with your next deal. The less you borrow, the less you pay. But, there will always be a need for investors to help you since you do not always want to use all your own money when you don't have to.


If you know anybody that is willing to earn a great return on their investments backed by high equity real estate deals, let me know. I can certainly set them up on a track to get a return that will make their 401K's look pitiful.