Reader mail: Real Estate Investing- Finding the money
I understand education is important, that is undebatable. My problem is going in which direction to obtain money for me to actually start the house flipping. Me being able to fix the house and flip it is not the issue.
It's where to start and how to get there.
I've researched hard money lenders, bank loans, unsecured business loans, my initial step to making my real estate career successful in the beginning were assignment contracts, bird dogging, so I can establish enough cash flow to bypass those other options. The thing is I live in New York, assignment contracts are just not
popular around here. So I need to let the clutch go and start driving so I can get underway, if that analogy makes any sense, LOL.
Thanks for the quick response, it's not that often you find someone who doesn't forget where they came from. So hats off to you on that one. I appreciate your
|LM says: Chris, if it’s any comfort you are not alone. It used to be that finding the money for real estate investing was relatively easy and the hard thing was finding the deal. Now things are very much the other way around. |
Before I go any further, let me warn you about obstacles and adversity because that is all that keeps us from achieving what we want. Whether is money, knowledge, fear, etc. there is always something out there that stands in the way of achieving what we want. What I have learned from those more successful than me is that they only focus on how to get around the obstacle and give little or no thought to the fact that they might not get through it.
Therefore you want to make sure you only look for ways of making it happen instead of wondering whether you can make it happen or not…
Now, when it comes to money for real estate investing, like everything else in this business there is more than one way to skin a cat. You have already looked at some of the alternatives. Take hard money lenders… they are expensive, yes, but if you find a deal with the right numbers this is a viable alternative.
Not to long ago I was talking to my closing attorney and he commented how he has been closing deals for another local investor and cutting out $100k checks to him after closing and he is doing all his deals with hard money lenders…
He is finding and doing deals with the right numbers…buying a house for $30, 40, 50k, doing a $100-150K rehab and then selling for $200-300k+. He has partnered up with a general contractor and then worked out a 50/50 profit split instead of paying the GC up front.
you can imagine, these are not paint and carpet rehabs but are more involved. They are turning a 1,000 sft, 2 bed, one bath house into a 4 bed, 2.5 bath house with 3,000 sft. But the point is they found a way…
If you look at House #6, I did that real estate investing deal with private money. An acquaintance of mine had seen the progress that I had made with houses #1 – 5 and wanted in. So they took some money that they had sitting in a bank CD earning 1.2% and gave them to me for the purchase of this house and for 8 months I paid them 10%. It’s a good deal for the both of us and it was very easy for me to find this money.
I suggest you do the same. Look at every one you know and explain what you want to do and how it can benefit them . There is a lot of people out there with money in 401k’s, IRA’s or other savings where they are earning next to nothing. A private money loan can be worked out in 100 different ways that can benefit both of you.
Also think of other ways you can purchase the property without paying cash up front…the owner can finance it for you, you can assume the loan, private money, hard money, lease purchase and so on. Each situation is different but the point being that you should not give up if the first and most immediate route does not work.
You also mention that where you are at assignments are not popular. I am not sure what that means but I would question why assignments are not popular. I know on some REO (bank owned) properties the bank will not let you assign the property although it is perfectly legal. So if that were the case and you want to assign something then look for other properties where you can because it is doable.
As you will see very soon I am starting work on the next real estate investing property and this one came to me through a wholesaler. He put the property under contract first and then added me to the contract instead of assigning it. I then purchased the property and then he gets out of the contract/title in exchange for a fee. Get it?
Have you met and talked to other investors in your area? Find out what they are doing and how. I assure you there is someone doing deals in your area. If you are looking where to start this is a great way. Study their deals, area, their numbers, how much they bought for and what they sold for, etc.
Learning these details will give you a great deal of confidence.