The Inside Guide to Funding Real Estate Investments
How to Get the Money You Need for the Property You Want
Published on 6. March 2018
Book
Paperback/Softback
240 pages
978-0-8144-3885-5 (ISBN)
Description
Great financing is the holy grail of real estate--with the power to make or break the deal. Learn how to get the money you need for the property you need.
Whether you are brokering your first deal or your fiftieth, finding the right financing for that specific situation can be the most important challenge you face. However, you can find nearly unlimited supplies of funding for all your real estate deals if you know where to look
The Inside Guide to Funding Real Estate Investments introduces you to the range of options available--from traditional mortgages and asset-based loans to crowdfunding and private money--and provides an inside look into the loan process as a whole and how lenders think through different scenarios. Learn all there is to know about:
What lenders are looking for
How to close with confidence
How to maintain sufficient liquidity
How to protect your credit position for future deals
What to do when deals go south
Whether you're planning to fix and flip or buy and hold, you can rest confidently that you are in prime position to not only avoid costly borrowing mistakes but also be set up for real estate success beyond what you thought possible with The Inside Guide to Funding Real Estate Investments by your side.
Whether you are brokering your first deal or your fiftieth, finding the right financing for that specific situation can be the most important challenge you face. However, you can find nearly unlimited supplies of funding for all your real estate deals if you know where to look
The Inside Guide to Funding Real Estate Investments introduces you to the range of options available--from traditional mortgages and asset-based loans to crowdfunding and private money--and provides an inside look into the loan process as a whole and how lenders think through different scenarios. Learn all there is to know about:
What lenders are looking for
How to close with confidence
How to maintain sufficient liquidity
How to protect your credit position for future deals
What to do when deals go south
Whether you're planning to fix and flip or buy and hold, you can rest confidently that you are in prime position to not only avoid costly borrowing mistakes but also be set up for real estate success beyond what you thought possible with The Inside Guide to Funding Real Estate Investments by your side.
More details
Language
English
Place of publication
United States
Publishing group
HarperCollins Focus
Dimensions
Height: 229 mm
Width: 152 mm
Thickness: 15 mm
Weight
424 gr
ISBN-13
978-0-8144-3885-5 (9780814438855)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Person
ROSS HAMILTON is Founder and CEO of ConnectedInvestors.com,an on line platform that connects real estate investors with funding sources, property resources, and more.
Content
CONTENTS
Forewordxv
Introductionxvii
1. The Big Picture of Real Estate Investing1
The Vehicle and Strategy1
Three Common Real Estate Investment Exit Strategies2
More About Exit Strategies5
A Path to Success6
2. An Overview of Funding Options9
Traditional Mortgage Lending 10
Asset-Based Loans 10
Private Money Loans11
Crowdfunding11
3. An Introduction to Asset-Based Loans13
Is Asset-Based Lending What You Need?13
The Good, the Bad, the Ugly, and the Facts of Working ?with Asset-Based Lenders15
4. An Introduction to Hard Money Lenders 17
Can Hard Money Lenders Be a Good Source of ?Funding for You?17
Who Uses Hard Money Loans? 18
5. What You Need to Know About Private Money Lenders21
Can Private Money Lenders Be the Answer for You? 21
Who They Are21
Two Types of Private Money Lenders22
How to Find Private Money Lenders24
What Lenders Want24
The Importance of Relationships 25
The Benefits of Private Money 26
6. How to Take the Mystery Out of Private Money29
Is It Really Possible to Borrow from Private Individuals?29
The Components of a Private Money Loan 30
A Sample Deal31
Putting It on Paper 32
7. Thinking of Crowdfunding Your Deal?35
The Basics You Need to Know 35
The Basic Model36
When Does It Make Sense to Crowdfund a Deal? 37
What About Debt vs. Equity? 38
The Cost to Raise Capital Through a Crowdfunding Platform38
8. The New Kid on the Block: Crowdfunding41
Is Crowdfunding a Good Option for You? 41
Why Do It? 42
How to Participate in a Crowdfunded Property43
When Are Returns Received?43
How Do Investors Earn Returns?43
Due Diligence44
9. Partnering to Get the Funds You Need 47
When Should Property Investors Consider a Partner to ?Obtain More Funding?47
Real Estate Partnerships 101 47
Advantages of Partnering Up 48
Potential Cons of Partnering Up48
Smart Times to Partner Up49
Who Can Investors Partner With?49
What and Who to Avoid When Pitching Potential Partners ?for Money50
How to Make It Work51
10. Using Banks to Fund Real Estate Investments 53
Are Banks and Traditional Lenders a Viable Option?53
What It Takes to Fund Investment Property54
Why Traditional Lenders Have Turned Away from ?Funding Investors55
Pros and Cons56
Alternative Strategy58
11. How to Find Asset-Based Lenders61
Who Makes Asset-Based Loans?61
The Traditional Method of Finding Asset-Based Lenders62
The New Way to Find Asset-Based Loans63
12. Inside the Mind of Asset-Based Lenders65
What Do You Need to Know to Get Your Deal Funded?65
The Six C's66
What Scares Lenders Away?67
What If You Can't Repay?68
What's Your Next Step?68
13. Asset-Based Lenders: A Peek at Their Cards71
What More Do You Need to Know About How ?They Operate?71
How Asset-Based Lenders Make Money and How It Works ?to Fund Your Deal71
Key Areas Where Asset-Based Lenders and Their Capital ?Partners Make Money72
14. Dealing with Down Payments 75
Five Ways to Secure a Down Payment for Real Estate ?Investment 76
15. The Dirty Truth About Some Real Estate Lenders 79
Are You Ready for the Truth? 79
The Unstoppable Money Machine 79
Eight Common Lender Scams 80
Overpromise and Underdeliver 82
Tips for Finding Lenders You Can Trust 83
16. Hard Money Lender Scams and How to Avoid Them 85
Fees 85
Johnny Come Lately 86
17. How to Successfully Get Funded as a New Investor 89
Specific Challenges Facing Newer Real Estate Investors 89
What to Look for in a Real Estate Lender 90
How to Improve Your Funding Success as a New Investor 91
18. How to Land the Best Loans for Your Deals 93
Finding the Best Financing for Investment Property 93
What's So Important About Finding the Right Loan? 93
How to Match Loans and Lenders to Your Needs 94
Financing a Real Estate Investment Using Different ?Real Estate Strategies 95
Comparing Loans for Your Real Estate Deals 97
Quick Tips for Quickly Homing in on the Best Loan Programs97
19. Is Your Baby Ugly? 99
The Due Diligence Steps Every Real Estate Investor ?Should Take 99
Everyone Thinks Their Baby Is Beautiful 99
How to Screen for Money Makers 100
Rules of Thumb 101
Confirming Property Values 102
Is There a Lender for This Deal? 105
20. Estimating Your Project's Costs 107
How Much Is Your Property Renovation Project Going ?to Cost? 107
Knowing Your Customer and Your Exit Strategy 107
Inspecting and Evaluating the Property 108
General Rules of Thumb 109
Avoiding the Traps 110
Funding and the Numbers Game 112
The Scope of Work 113
Tales from the Trenches 113
Collaborating with Partners 114
Coordinating Contractors 114
Running Out of Money 114
Seven Steps to Your Scope of Work 115
21. The Time Value of Money 117
Don't Underestimate the Value of Your Time 117
The Time Value of Money 118
22. What Every Investor Needs to Know About Terms, Cash Flow, ?and Formulas 121
Do You Know What You Don't Know? 121
MAO or the 70 Percent Rule 121
The Wholesaler's Formulas 122
An Alternative to the 70 Percent Rule for Flippers 123
Net Operating Income 124
23. The Hole Poker: The Devil's Advocate 129
An Important Part of Your Real Estate Investment Team
129
Emotional vs. Fact-Based Real Estate Investment 129
The Value of Second Opinions for Funding 131
The Hole Poker 131
Where to Find a Good Hole Poker 132
How to Get a Great Hole Poker to Help You 133
Knowing When to Go Your Own Way 133
24. Next! Know When to Walk Away from a Real Estate Deal 135
The Bite Test 135
Taking a Hit 137
Living to Fight Another Day 138
Plenty of Fish in the Sea 138
25. Dealing with Detours 139
The Power of Plan B 139
Ten Detours to Take When Things Don't Go as Planned 139
Important Considerations for a Successful Venture 140
26. What Comes First? The Deal or the Dollars? 141
Getting Ready to Be Ready 141
Putting the Horse Before the Cart 141
Finding the Right Funding Sources for Your Deals 142
What You Need to Get Going 144
27. Preparing to Get Your Loan Funded 147
Failing to Plan Is Planning to Fail 147
Planning for Success 147
What You Need to Fund Your Deal 148
Mortgage Forms and Documents 149
Scope of Work 150
Closing Documents 150
Quick Tips for Setting Up a Smooth Funding Process 150
28. Who to Take with You 153
The Real Estate Professionals You Need to Close the Deal 153
Seven Real Estate Pros to Have on Your Side 153
29. Estimating Your Time of Arrival : How Long Does It Take to Fund and Close a Real Estate Deal? And What Can Real Estate Investors Do to Streamline the Process?157
How Long Will It Take to Close? 157
Steps Involved in Closing a Real Estate Deal 158
Things That Will Slow You Down 159
When You Close--Watch the Calendar 160
Three Roadblocks to Watch For 160
Preparing for Closing Day 161
30. Avoiding Costly Borrowing Mistakes 163
Understanding the Underlying Costs of Funding 163
Earnest Money Deposits 163
Real Estate Contract Contingencies 164
Due Diligence Costs 165
Buying Property Sight Unseen 166
Sabotaging Your Loan Application 166
Title and Lien Searches 167
Accurately Forecasting Closing Time Frames 167
Failure to Hit the Ground Running 168
31. Investment Property Loans: Everything Is Negotiable, Right? 171
The Toll Booth--How Much Will It Cost to Get ?Your Deal Funded? 171
The Power of Leverage 171
Borrowing Costs + Investment Strategy 172
Common Borrowing Costs and Fees 173
Everything Is Negotiable, Right? 173
Negotiating Smarts 174
Quick Tips for Negotiating Better Loan Deals 175
32. How to Choose the Best Funding and Investment Property ?Lender to Meet Your Needs 177
Taking Different Paths to Reach the Same Destination 177
Picking the Right Lender for Your Project 177
The Importance of Investor-Lender Relationships 179
The Reality of the Lender Relationship 179
Investment Property Lenders Need You Too 180
33. High-Performance Property Financing: Understanding ?the Mechanics of Your Loan 181
How to Keep Your Loans Rolling Through till Closing 181
Just How Much Does It Matter?181
How the Loan Process Works 182
Managing Your Loan 183
What to Expect at the Closing Table 184
Being Prepared to Close: A Checklist 184
Post-Closing Considerations 185
34. Fix and Flip Strategies to Get Your Investment Property Sold 187
What Smart Tactics Can Help Real Estate Investors Go ?from Flip to Flip with Ease? 187
Tips for Fixing and Flipping Fast 187
Renovate to Your Target Market to Sell Fast 188
When to Start Marketing for Resale 189
Choosing the Right Real Estate Marketing Formula for ?Your Deals 189
Reselling the Property 190
The Buyers List 192
35. Buy and Hold Real Estate Investment 195
Maximizing Income Property Opportunities 195
Refinancing and Optimizing Financial Leverage196
What's the Best Leasing Strategy? 197
Intelligent Tenant Screening 198
Property Maintenance and Management 198
36. Keep Fueling the Journey 201
Lap After Lap 201
Performance-Boosting Analysis 202
Quick Tips for Tuning Your Engine202
The Reality of Deal Flow203
Tips for Improving Deal Flow 203
Relationships204
Curated Real Estate Deals205
Get Help205
37. When Your Lender Takes the Exit207
When Lenders Bail 207
Why Lenders Bail 207
How to Recognize the Signs208
What to Do209
Preventive Maintenance210
38. When Your Rehab Goes South: What You Can Do When ?Your Rehab Takes a Wrong Turn 211
Why Rehabs Go Wrong211
Coping with Over Budget Issues212
Where to Save213
Where Not to Skimp213
When Investors Need More Money214
Working with Your Lender When You Need More Money 214
Other Capital Sources 215
Four Strategies for Turning Your Rehab Nightmare ?into Cash 215
39. What If You Can't Make Good on Your Investment ?Property Loan? 217
Why Investors Can't Pay Their Loans 217
Knowing Your Options218
What Happens When Investors Don't Pay Their Loans? 219
Alternatives to Foreclosure 220
Effects of Foreclosure on Real Estate Investors 220
40. When the Wheels Come Off Your Real Estate ?Investment Venture 223
It Happens to the Best of Us 223
Why Do Real Estate Investors Fail? 224
Tips for Preventing Failure in Real Estate Investment 225
Tips for Getting Back on the Road to Real Estate Riches 225
Opportunity Is Knocking 226
Index 227
Forewordxv
Introductionxvii
1. The Big Picture of Real Estate Investing1
The Vehicle and Strategy1
Three Common Real Estate Investment Exit Strategies2
More About Exit Strategies5
A Path to Success6
2. An Overview of Funding Options9
Traditional Mortgage Lending 10
Asset-Based Loans 10
Private Money Loans11
Crowdfunding11
3. An Introduction to Asset-Based Loans13
Is Asset-Based Lending What You Need?13
The Good, the Bad, the Ugly, and the Facts of Working ?with Asset-Based Lenders15
4. An Introduction to Hard Money Lenders 17
Can Hard Money Lenders Be a Good Source of ?Funding for You?17
Who Uses Hard Money Loans? 18
5. What You Need to Know About Private Money Lenders21
Can Private Money Lenders Be the Answer for You? 21
Who They Are21
Two Types of Private Money Lenders22
How to Find Private Money Lenders24
What Lenders Want24
The Importance of Relationships 25
The Benefits of Private Money 26
6. How to Take the Mystery Out of Private Money29
Is It Really Possible to Borrow from Private Individuals?29
The Components of a Private Money Loan 30
A Sample Deal31
Putting It on Paper 32
7. Thinking of Crowdfunding Your Deal?35
The Basics You Need to Know 35
The Basic Model36
When Does It Make Sense to Crowdfund a Deal? 37
What About Debt vs. Equity? 38
The Cost to Raise Capital Through a Crowdfunding Platform38
8. The New Kid on the Block: Crowdfunding41
Is Crowdfunding a Good Option for You? 41
Why Do It? 42
How to Participate in a Crowdfunded Property43
When Are Returns Received?43
How Do Investors Earn Returns?43
Due Diligence44
9. Partnering to Get the Funds You Need 47
When Should Property Investors Consider a Partner to ?Obtain More Funding?47
Real Estate Partnerships 101 47
Advantages of Partnering Up 48
Potential Cons of Partnering Up48
Smart Times to Partner Up49
Who Can Investors Partner With?49
What and Who to Avoid When Pitching Potential Partners ?for Money50
How to Make It Work51
10. Using Banks to Fund Real Estate Investments 53
Are Banks and Traditional Lenders a Viable Option?53
What It Takes to Fund Investment Property54
Why Traditional Lenders Have Turned Away from ?Funding Investors55
Pros and Cons56
Alternative Strategy58
11. How to Find Asset-Based Lenders61
Who Makes Asset-Based Loans?61
The Traditional Method of Finding Asset-Based Lenders62
The New Way to Find Asset-Based Loans63
12. Inside the Mind of Asset-Based Lenders65
What Do You Need to Know to Get Your Deal Funded?65
The Six C's66
What Scares Lenders Away?67
What If You Can't Repay?68
What's Your Next Step?68
13. Asset-Based Lenders: A Peek at Their Cards71
What More Do You Need to Know About How ?They Operate?71
How Asset-Based Lenders Make Money and How It Works ?to Fund Your Deal71
Key Areas Where Asset-Based Lenders and Their Capital ?Partners Make Money72
14. Dealing with Down Payments 75
Five Ways to Secure a Down Payment for Real Estate ?Investment 76
15. The Dirty Truth About Some Real Estate Lenders 79
Are You Ready for the Truth? 79
The Unstoppable Money Machine 79
Eight Common Lender Scams 80
Overpromise and Underdeliver 82
Tips for Finding Lenders You Can Trust 83
16. Hard Money Lender Scams and How to Avoid Them 85
Fees 85
Johnny Come Lately 86
17. How to Successfully Get Funded as a New Investor 89
Specific Challenges Facing Newer Real Estate Investors 89
What to Look for in a Real Estate Lender 90
How to Improve Your Funding Success as a New Investor 91
18. How to Land the Best Loans for Your Deals 93
Finding the Best Financing for Investment Property 93
What's So Important About Finding the Right Loan? 93
How to Match Loans and Lenders to Your Needs 94
Financing a Real Estate Investment Using Different ?Real Estate Strategies 95
Comparing Loans for Your Real Estate Deals 97
Quick Tips for Quickly Homing in on the Best Loan Programs97
19. Is Your Baby Ugly? 99
The Due Diligence Steps Every Real Estate Investor ?Should Take 99
Everyone Thinks Their Baby Is Beautiful 99
How to Screen for Money Makers 100
Rules of Thumb 101
Confirming Property Values 102
Is There a Lender for This Deal? 105
20. Estimating Your Project's Costs 107
How Much Is Your Property Renovation Project Going ?to Cost? 107
Knowing Your Customer and Your Exit Strategy 107
Inspecting and Evaluating the Property 108
General Rules of Thumb 109
Avoiding the Traps 110
Funding and the Numbers Game 112
The Scope of Work 113
Tales from the Trenches 113
Collaborating with Partners 114
Coordinating Contractors 114
Running Out of Money 114
Seven Steps to Your Scope of Work 115
21. The Time Value of Money 117
Don't Underestimate the Value of Your Time 117
The Time Value of Money 118
22. What Every Investor Needs to Know About Terms, Cash Flow, ?and Formulas 121
Do You Know What You Don't Know? 121
MAO or the 70 Percent Rule 121
The Wholesaler's Formulas 122
An Alternative to the 70 Percent Rule for Flippers 123
Net Operating Income 124
23. The Hole Poker: The Devil's Advocate 129
An Important Part of Your Real Estate Investment Team
129
Emotional vs. Fact-Based Real Estate Investment 129
The Value of Second Opinions for Funding 131
The Hole Poker 131
Where to Find a Good Hole Poker 132
How to Get a Great Hole Poker to Help You 133
Knowing When to Go Your Own Way 133
24. Next! Know When to Walk Away from a Real Estate Deal 135
The Bite Test 135
Taking a Hit 137
Living to Fight Another Day 138
Plenty of Fish in the Sea 138
25. Dealing with Detours 139
The Power of Plan B 139
Ten Detours to Take When Things Don't Go as Planned 139
Important Considerations for a Successful Venture 140
26. What Comes First? The Deal or the Dollars? 141
Getting Ready to Be Ready 141
Putting the Horse Before the Cart 141
Finding the Right Funding Sources for Your Deals 142
What You Need to Get Going 144
27. Preparing to Get Your Loan Funded 147
Failing to Plan Is Planning to Fail 147
Planning for Success 147
What You Need to Fund Your Deal 148
Mortgage Forms and Documents 149
Scope of Work 150
Closing Documents 150
Quick Tips for Setting Up a Smooth Funding Process 150
28. Who to Take with You 153
The Real Estate Professionals You Need to Close the Deal 153
Seven Real Estate Pros to Have on Your Side 153
29. Estimating Your Time of Arrival : How Long Does It Take to Fund and Close a Real Estate Deal? And What Can Real Estate Investors Do to Streamline the Process?157
How Long Will It Take to Close? 157
Steps Involved in Closing a Real Estate Deal 158
Things That Will Slow You Down 159
When You Close--Watch the Calendar 160
Three Roadblocks to Watch For 160
Preparing for Closing Day 161
30. Avoiding Costly Borrowing Mistakes 163
Understanding the Underlying Costs of Funding 163
Earnest Money Deposits 163
Real Estate Contract Contingencies 164
Due Diligence Costs 165
Buying Property Sight Unseen 166
Sabotaging Your Loan Application 166
Title and Lien Searches 167
Accurately Forecasting Closing Time Frames 167
Failure to Hit the Ground Running 168
31. Investment Property Loans: Everything Is Negotiable, Right? 171
The Toll Booth--How Much Will It Cost to Get ?Your Deal Funded? 171
The Power of Leverage 171
Borrowing Costs + Investment Strategy 172
Common Borrowing Costs and Fees 173
Everything Is Negotiable, Right? 173
Negotiating Smarts 174
Quick Tips for Negotiating Better Loan Deals 175
32. How to Choose the Best Funding and Investment Property ?Lender to Meet Your Needs 177
Taking Different Paths to Reach the Same Destination 177
Picking the Right Lender for Your Project 177
The Importance of Investor-Lender Relationships 179
The Reality of the Lender Relationship 179
Investment Property Lenders Need You Too 180
33. High-Performance Property Financing: Understanding ?the Mechanics of Your Loan 181
How to Keep Your Loans Rolling Through till Closing 181
Just How Much Does It Matter?181
How the Loan Process Works 182
Managing Your Loan 183
What to Expect at the Closing Table 184
Being Prepared to Close: A Checklist 184
Post-Closing Considerations 185
34. Fix and Flip Strategies to Get Your Investment Property Sold 187
What Smart Tactics Can Help Real Estate Investors Go ?from Flip to Flip with Ease? 187
Tips for Fixing and Flipping Fast 187
Renovate to Your Target Market to Sell Fast 188
When to Start Marketing for Resale 189
Choosing the Right Real Estate Marketing Formula for ?Your Deals 189
Reselling the Property 190
The Buyers List 192
35. Buy and Hold Real Estate Investment 195
Maximizing Income Property Opportunities 195
Refinancing and Optimizing Financial Leverage196
What's the Best Leasing Strategy? 197
Intelligent Tenant Screening 198
Property Maintenance and Management 198
36. Keep Fueling the Journey 201
Lap After Lap 201
Performance-Boosting Analysis 202
Quick Tips for Tuning Your Engine202
The Reality of Deal Flow203
Tips for Improving Deal Flow 203
Relationships204
Curated Real Estate Deals205
Get Help205
37. When Your Lender Takes the Exit207
When Lenders Bail 207
Why Lenders Bail 207
How to Recognize the Signs208
What to Do209
Preventive Maintenance210
38. When Your Rehab Goes South: What You Can Do When ?Your Rehab Takes a Wrong Turn 211
Why Rehabs Go Wrong211
Coping with Over Budget Issues212
Where to Save213
Where Not to Skimp213
When Investors Need More Money214
Working with Your Lender When You Need More Money 214
Other Capital Sources 215
Four Strategies for Turning Your Rehab Nightmare ?into Cash 215
39. What If You Can't Make Good on Your Investment ?Property Loan? 217
Why Investors Can't Pay Their Loans 217
Knowing Your Options218
What Happens When Investors Don't Pay Their Loans? 219
Alternatives to Foreclosure 220
Effects of Foreclosure on Real Estate Investors 220
40. When the Wheels Come Off Your Real Estate ?Investment Venture 223
It Happens to the Best of Us 223
Why Do Real Estate Investors Fail? 224
Tips for Preventing Failure in Real Estate Investment 225
Tips for Getting Back on the Road to Real Estate Riches 225
Opportunity Is Knocking 226
Index 227