Financing Real Estate Investments
Here’s a question that crosses just about every new real estate investor’s mind…
“How can I ensure that I have the necessary hard money funding or private funding available to feel confident in making offers?”
There’s a couple of important things that you have to understand about financing real estate investments and we’ll address both of those in this post.
The first answer to your question is to make sure that you are qualified for a loan. In the world of private or hard money, most lenders are equity based lenders.
What does that mean? It simply means that they primarily make their lending decisions based on the credentials of a piece of real estate you want to invest in.
With an equity based lender, there are only a few things that can prevent you personally from not being qualified for financing. Things such as a current foreclosure or a bankruptcy.
There are also certain types of properties or types of deals that all lenders will/will not do, so you need to be aware of these up front too. For a list of all the pre-qualifications for DoHardMoney.com, simply visit this page: http://www.dohardmoney.com/pre-qualification
To give you confidence in making offers, we’ve put together a pre-qualification letter that you can print on the page above.
As long as you meet the lender’s qualifications, funding will be available to you.
Which brings us to the second answer to your question…
Assuming that you are pre-qualified, the bigger piece of the puzzle is the property you want to invest in. If you want to ensure that money is available for your deal, you need to do the right due diligence up front before you submit an application.
If you aren’t calculating ARV properly you’ll come up with different numbers than what your HML will when evaluating the property. The hard money lender will still be able to give you money, but it will probably be less than what you expected and need to close the deal.
What we have also done to give you confidence in making offers is put together our one of a kind proof of funds system. You can print POF letters 24/7 on demand that you can present to banks and sellers letting them know that you are approved for private financing.
Lastly, I want to address some things that newbies don’t get about making offers.
When investing in real estate, it’s different than buying a personal residence. In fact it’s a little bit backwards because you’ll never know if you can get all the financing you are looking for until you have an offer accepted.
Here’s why…
It goes back to the fact that HML’s are equity based lenders. They need to look at the property you want to buy BEFORE they will make a lending decision.
They send out independent property evaluators who look at comps and give an ARV and estimated repair costs. Sending these people out costs money – and those expenses are passed on to you the borrower.
So unless you want to pay a few hundred bucks every time you are thinking about a particular property just to find out exactly how much can be loaned to you, you won’t be doing this until you have the property under contract.
Another thing is that you are going to have to make a lot of offers before you ever get one accepted, especially if you are low balling them.
What you need to do is put contingencies in the contract that lets you walk away for different reasons and keep your earnest money. That way you can make all of the offers that you need to with full confidence because you’ll be able to back out if you don’t get all the hard money you were expecting.
If you are worried that a situation will arise where you are not able to get the funding you were expecting, but believe your deal is a good deal…
…we’ve put together a program that will give you access to fund these “money gaps”. It’s really the only way to get full 100% financing no matter your credit, job history or current income.
You can see the details of how this works on the next page: click here
