Having a quick and steady supply of cash has always been one of the biggest problems any real estate investor has to conquer. It’s tough to get traditional financing today, and it is just so costly to use hard money lenders. So, what’s the answer?
I have a guest post today submitted by Shawn Ambrose and Samantha Taylor of MorgageFit.com. Check out what these guys have to say.
Cash is King!
If you want to succeed as a real estate investor the ability to take advantage of a good deal is very important. This can only happen when you already have a supply of cash available whenever you need it.
It is a no doubt that with the current state of economy and the fall of the housing market, it is quite difficult to get a traditional home mortgage. Most lenders have stringent conditions for their lending in this real estate market with your credit score and a verifiable income playing a huge part in the final decision. When you are a real estate investor and are self-employed, it is quite difficult for you to get traditional financing in the form of a home mortgage. Even if you get one you will only be able to do a few deals through each bank. As a real estate investor it is imperative for you to be able to have a source of cash to close those deals that come your way.
How can you get a source of money for your real estate investment?
Traditionally real estate investors have been dependent on hard money lenders because of the limited financing sources that were available. But even hard money lenders have tightened their criteria for lending you money. Moreover, you might not want to pay the high rate of interest that the hard money lenders charge you. So the problem of financing becomes a huge problem. This is why other forms of private loans are gaining momentum now.
A good source of private money gives you the following advantages:
- When you have determined which deals you want to do, having a source of funding set up will allow you to move quickly.
- Your ability to close deals will not be controlled by another person’s approval as it is with private money lenders.
- Your deals are quick to close if you have a private money source at your disposal. You won’t lose out on those deals that require you to act fast.
- When you are getting your financing through a private money investor, you can typically have your deal funded in few days. For instance, if you want to buy a house going into foreclosure, it might be too late if you have to go through all the loops of government funding.
- You can get private money at a much lower cost. The cost of private money is less than getting hard money even though private money investors get a higher return on their investment. You get cheap ready cash with just a few days’ notice.
Finally … If you don’t find a private lender to finance you, you can even consider seeking a partner for financing. However a real estate investor should always be on the lookout for one or more private lenders for their own benefit.
This article was submitted by Shawn Ambrose who is the head of content for the company and Samantha Taylor. Samantha is the Community Mentor of Mortgage Fit and has been contributing to the Community since 2005.
For more information you can check out their site at http://www.MortgageFit.com