Finding Capital For Real Estate Investing
by Sam Ally
Finding capital to fund real estate investments just takes a little thought.
Every deal and business venture will take money. It does take money to make money, but it doesn’t have to be your money. So having said that, where can you find money that isn’t yours so you can use it to go faster and farther than you could have using only your own resources?
Credit Cards: A lot of people are afraid of credit cards, but you don’t need to be if you understand how to play by their rules.
If you pay your minimum each month on time, isn’t “15 months at 0% interest” on your card the same as a free loan? It is, and if you don’t want to pay interest after 15 months, how hard is it to find another credit card that will offer you another 15 months of 0% interest on balance transfers? Just transfer it to another card. Okay so you say those cards are not out there anymore. So what, it doesn’t have to be a 0% card. It could be a 10% card or more…It’s not your $$$. Yes you do have to pay it back: with the profit you just made on a transaction you may not have attempted doing!
Just be smart about using credit cards and your credit score will actually go up as your total credit limit increases from acquiring new cards. Your new Investor partners Discover, Amex, etc certainly won’t mind……. Heck I know an Investor that has used this strategy before many of you were born.
401K/IRA’s/Stocks: Tired of getting 5% in the stock market (or losing money)? You can self-direct your retirement plan and actually use that money to invest in real estate instead of the stock market.
Sound illegal? It’s not–it’s been going it for years. It’s your money, for crying out loud. Why should someone else decide for you what you do with it?
Sound risky? I thought it did too till I realized that the senior citizens who are now working at Wal-Mart and McDonalds likely had their retirement in a safe and secure index fund for 40 years, but after retiring they found out that they were going to out-live the money they had saved and were forced to go back to work.
Take charge of your retirement -don’t leave your future in the hands of a mutual fund manager. Private Money is fueling purchases of properties all over the globe. Besides, even Wal Mart has slowed hiring for greeters.
HELOC’s: Got your own house with some equity in it? Borrow against it. That’s not wise if you’re buying a boat or a big-screen TV with the money, but that money is just sitting there in your house doing nothing for you if you’ve got real estate deals you could be doing with it. Again, maybe a bit more challenging in 2011 but it can be done.
Business Lines of Credit: Besides personal lines of credit like credit cards and such, there are business lines of credit available to businesses.
Since it can take a while for a business to build enough history to qualify for a line of credit, it’s a lot easier and faster to assume the lines of credit from an existing business.
The way to do this is to find a business owner that has recently discontinued doing business and assume control of their legal business entity and all attached lines of credit. You’ll have to work out a deal with them, but if they’re not using that business any more then what else are they going to do with it? These are known as Shelf Corporations. Remember to consult with your attorney & CPA as there are a number of variables to consider before trying this one.
Hard Money Lenders: At the very least there are hard money lenders (professional lenders who let you borrow money based on your track record and the deal you’re doing, as opposed to your income and credit score like banks require).
They can be expensive, but often it’s better to work with them than let the deal flop. Hard money lenders are very often the fastest and most reliable money source you can find.
Transactional Funding: A variety of these sources can be found to fund your same day closings & some will go out to 30 days , for a few points 2-4%, along with wiring costs (usually under $500) and also provide you with a proof of funds letter to get the deal done. This means nothing out of your pocket, it all happens at the closing table.
Most of these things require you go into debt. That causes some people’s stress level to go up. So here’s your gut check:
–If you’re willing to go out on a limb and into debt in order to excel in finances and life, give yourself an A+.
–If you’re saying to yourself “I don’t like going into debt–I’d much rather pay for things as I have the money” then you’re going to move at a snail’s pace creating success for yourself. A job with a 401k is probably a better fit for you.
If you’re going to make money in real estate, get comfortable with debt. Good Debt vs. Bad Debt. Real estate investors are in a lot of debt, and the more debt we go into the wealthier we become because we know how to make debt work for us. The management & movement of money folks, is just using debt properly to create wealth. Sounds a lot like what the banks do doesn’t it. It’s math not magic. Now go get that first deal.
About The Author:
Sam Ally invites you to learn to earn high and even INFINITE returns investing in commercial real estate with a group (on money you used to have sitting in pathetic CD’s at 4% or less) when
you become a Select Member with America’s #1 Real Estate Network today!
Join us for an upcoming educational presentation online to get information or to get started now.
Sam Ally is a resourceful Real Estate Investor, Social-Preneur, Speaker & Coach with over 25 years of entrepreneurial expertise. He is passionate about empowering others with the knowledge, resources & opportunities to excel.
Mr. Ally currently serves as Executive Director of the Investor Alliance Asset Management Group a division of the HIS Real Estate Network. Utilizing time tested & proven strategies Sam presents innovative real-estate based investment solutions to his clientele that intelligently and ethically leverage the current economic crisis into high annualized returns with low risk.
Category – Real Estate Investing