Need Funding For Your Next Real Estate Transaction? Knowing Your Options Is The First Step…
As a rule of thumb, unless you’re purchasing a property from a private seller and flipping it to a cash buyer, you’re going to need a solid funding source to do your deals.
There are several different funding sources out there, but which one you should use totally depends on the type of deal you’re doing.
Here are the top ways that real estate investors fund their deals:
- Personal cash
- Transactional funding
- Hard money
- Private lenders
Before making an offer or even considering investing in a property, make sure you know which type of funding is most suitable for each deal you do. Let’s review the different types of funding available and which situations they are suitable for:
Funding deals with your own cash
Even if you have the cash to fund your own deal, you most definitely shouldn’t unless you plan to sell quickly or refinance immediately. For obvious reasons, you will never want your liquidity tied up for any period of time. Make sure you’re thinking smart before investing your own cash. If you empty all of your pockets, you won’t the resources available if an even better deal comes along while you’re waiting to make back your investments.
Getting funds from a bank or lender
If you want to spend your time getting tortured while answering in-depth personal questions just so you can get denied for a loan anyways, then a bank is a great choice. No one wants to go through that. The interrogating questions and the embarrassment they put you through will make you feel like you’re guilty for a crime you didn’t even commit. This is especially true if you’re self-employed. Most banks won’t even consider funding a wholesale deal and it’s not worth the hassle to use their funding to hold a property either.
Using transactional funding for your deals
Transactional funding is without a doubt the best type of funding available for deals where you will be buying and selling a property quickly to a cash buyer, such as a landlord, investor, or rehabber. Deals like this do not require any repairs on your behalf and in many cases you can close within a few days. This type of funding is relatively cheap as well. As a matter of fact, there is a free funding source out there called No Fee Funding that provides free funding on same or next day transactions. There’s no risk, no fees, no points, nothing. Check it out by clicking this link.
Hard Money Lenders
Hard money lenders are extremely expensive, so you’ll only want to consider hard money to fund rehab deals. If you don’t have enough cash to put the typical 10%-20% required in many cases into the deal or if you don’t have near perfect credit, then this type of funding isn’t for you. Without both of those things, you won’t even get considered by a hard money lender.
Private Money Lenders
Private lenders, in many cases, provide the best means of funding for real estate investors. These types of lenders are looking for good deals, and if you’re bringing good deals to them, they will continue to fund for you. They can fund all kinds of deals, both commercial and residential and from flips to rehabs. The loans can be flexible, negotiable and generally don’t rely on your credit score. The only complication with private lenders is locating them.
In order to make more offers with confidence using tools like The Offer Generator here, you’ll need to know that you have funds readily available for any type of deal. There are many different kinds of funding available, but not every source is appropriate for every deal. In order to ensure you get the most use out of your time and the biggest profit check, make sure you use the most suitable source for every deal you do.