PRIVATE LENDING MINI-COURSE LESSON 1: SOURCES OF FINANCING

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Learn the secrets of using private lenders to fund your real estate deals
For more info visit: http://www.privatelendingfunding.com
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PRIVATE LENDING MINI-COURSE LESSON 1: SOURCES OF FINANCING

There are many sources of financing available for us to use as real estate investors. Being informed of the options available is important for structuring your real estate business.

Conventional Financing - This is the type of financing provided by banks and conventional lenders. It is long term and requires a lot of paperwork and qualifying. In addition, conventional lenders will only let one individual acquire a certain number of properties before they won't finance any more.

Hard Money - This is also referred to as rehab financing. It is short term and high interest and is intended to be used only for acquiring and rehabbing a property. It usually requires less qualifying on the part of the investor because it is loaned at a very low LTV.

Creative Financing - This is a blanket term for techniques such as lease options, subject to, and owner financing that will allow you to acquire control of a property without putting money down. These techniques are great when you can use them but are not applicable when the seller needs to sell for cash.

Revolving Credit Sources - These are sources such as business lines of credit and credit cards. While these can be flexible sources of financing, the interest rates tend to be high, and they require monthly payments to be made to service the debt. They also limit you to the size of your available credit line.

Business Partners - You can partner up with a wealthy individual or funding partner to get the cash for your deals, if you are willing to share control of your business.

Cash - If you have sufficient personal cash you can use it in your real estate deals, but why not put it into more passive investments and leverage the power of other people's money in your real estate business?

Private Lenders - These are private individuals with money to lend for investment purposes. They may or may not be wealthy but they do have excess capital available, over and above what they need to live on, that is earning a lower return than that which you are willing to offer. The advantage to working with private lenders is that you can set the terms by which you borrow.