Five Unconventional Sources of Capital for your Real Estate Investing Business
New real estate investors often stop before they even get started because they are not sure how to pay for their first real estate deal – it is overwhelming enough to start the marketing process…
When first starting your real estate investing business, you might be short for cash, not sure how to come up with a 10-20% down payment AND pay for the closing costs. You need capital to grow your real estate investing business!
Luckily, there are some good old-fashioned ways to buy a real estate investment property, and it is usually the down payment and the cost of getting the money (origination points, closing fees, earnest/option, inspection costs) that stop real estate investors when they are first starting out.
WARNING: With all investing, ALWAYS perform your due diligence!
If you are new to this business, check your investing strategy with a trusted mentor!
The challenge many investors have is not knowing where to find the capital!
What lender will lend 100% of the deal?....None – you have to have skin in the game! Typical costs for buying an investment property:
v Closing Costs
v Loan costs
v Re-hab costs
v Filing fees
v Property Taxes
v Pre-Paid Interest
So, what is an investor to do? How should they spend their time building a solid source of “capital” to grow their real estate investing business?
Here are some “capital strategies” worth looking into…
Ø Seller Financing
o Terms are negotiable, examples include
§ No interest payments to seller
§ Take over current payment
§ Make repairs on property (always get the Deed in your name)
§ Moving money for seller
§ Carry back down payment
Ø Money partners
o Terms are negotiable
§ Pay interest on money borrowed
§ Split proceeds of profit
§ Perform re-hab work
o Strong Joint Venture Agreement in place (think worse case scenario)
Ø Credit Card Advances
o Risky – and if you can’t manage money don’t go this route
o Numbers of deal must be accurate
o Ability to re-finance out to avoid high interest and risk profit margin
Ø Leverage on another investment
o Use Equity in another property
o Start an Airbnb business for additional cash flow in primary/secondary home
o Personal Loan at credit union
o HELOC – borrow against primary residence
Ø Lease Option
o Not legal in all states
o Ability to get into property with very small down payment
o First Right of Refusal built into Lease Agreement
o Part of rent applies to down payment
These “capital” strategies won’t work for everyone! The idea is that you can be creative with finding capital – you just need to know where to look! I created The Capital Blueprint Road Map and Fast Track for Real Estate Investors, just to give a simple plan of where you can find sources of capital for growing your real estate investing business.
If you want to have a leg up on where to find your capital for your next deal, click the link below today!....to get your free: The Capital Blueprint Road Map!
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