Financing
Just completed 1st rehab. House is on the market. Bought and rehabbed with cash. Common problem is the cash is tied in it and can't do anything until is sells other than make offer on next prop contingent on selling this one. Looking for ideas about financing options and how others eal with this problem.
Hi,
One idea if you want to do a volume business and/or free up cash as quickly as possible is to sell with owner financing, by having the buyer put 5% down, and in some cases Zero down.
You carry the note AT closing, but not PAST closing. At this same closing, you sell the first lien note for a cash lump sum.
These deals can close in 2 weeks if you have your photos, repair lists and receipts etc. organized.
Best, Dave
Hi Dave can you give some more info on how to do this?
Thanks
Joe
[addsig]
kfran1234
Thanks for the post. I’ve run into this problem a hundred times with investors. Many of my investors first got into the business with a mindset of using their capital to finance a venture in it’s entirety, then soon found out that cash in hand is far more valuable then equity in hand, especially once they recognized the earning potential of performing multiple projects simultaneously. And you certainly do not want to forgoe an acquisition when a good one falls on your lap.
First and foremost, try to establish a line of credit on a primary, second or even investment home. This enables you to access cash immediately for those sweet deals that just happen to pop up.
2nd, once you get past this transaction, leverage your buying power by financing as much as your credit and subject property will allow. It is sometimes hard to put your credit on the line for an investment, but in my eyes, it’s harder to put your hard earned cash on the line. Besides, once you lose your cash, it’s gone. You can always beg or borrow to keep up with your debt service, especially, if you chose to remain liquid from the get go.
3rd , look for a knowledgeable broker who will work with you and your goals. One that can help you grow your business and in turn grow his/her business. A strong relationship with a financing source with multiple outlets is priceless to an investor. Be careful however, as in today’s world, there are way too many brokers who quite frankly, should not be in the business. I don’t mean to throw stones at glass houses, but the professional brokers in the industry share my thoughts!
4th, in the interim – You may be able to place a line of credit on the subject property. When you say it’s on the market, how so. Is it on MLS?
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Allan Beraquit
[ Edited by Allan_FLMortgageBanker on Date 11/26/2004 ][ Edited by Allan_FLMortgageBanker on Date 11/26/2004 ]
It's all about double closings my friend. You don't need money at all!! Make a 'buyer list' by looking in the real-estate wanted section in the newspaper and call the 'We Buy Homes Fast' people and get a list of serious investors. Now, after you get the sales contract from the original owwner signed then E-mail all of your buyers and have the winning buyer close on the same day you will close w/the original owner!!! You are just paying money to the original owner 5 mins before you get it from your buyer!