Tag Archive for: private lenders

How to Buy: Breaking Down BRRRR

The BRRRR Method

 

Ready to build up a rental portfolio and get cash flow on properties with zero money down? The BRRRR Method.

Check out this 8-step guide to BRRRR investments.

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Have you heard of BRRRR? Here’s our 8-step guide to rehab and rent undermarket properties for maximum cash flow in your real estate investment business.

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Buy

Rehab

Rent

Refinance

Repeat

 

Check out these other crucial steps to the BRRRR  of real estate investing:

 

 

Read more on the BRRRR Method on Hard Money Mike here?

Download our free BRRRR roadmap at this link. And for more resources, check out these videos from our YouTube channel.

 

Wholesale properties

3 Must-Know Answers to Finding Undermarket Properties

A real estate investor’s intro to wholesalers.

At the end of the day, successful real estate investing hinges on one thing: finding good deals on properties.

The #1 way to get those deals is through wholesalers. But how do you find wholesalers? And what should you do next?

What Are Wholesalers?

Wholesalers are companies that research and locate below-market-value properties. They find homeowners – through mailers, texting, or other means of marketing – that are willing to sell undermarket.

Wholesalers keep some of the properties they acquire, but they sell many of them off to real estate investors. That’s where you come in.

You can, and should, make wholesalers a profitable member of your investment team. Let’s talk about:

  • How to find wholesalers
  • How to get on their “A-list”
  • How to verify their numbers

1. Where Do You Find Wholesalers?

There are some really small wholesalers that find one or two properties a month. Others are huge companies that spend hundreds of thousands of dollars per month, finding hundreds of homes every year.

Generally, the only way to find wholesalers is to ask around about who is selling properties in your area. Here are three ways to do this:

  1. Search Google. Simple: look up “I want a house in” and your city name. You’ll get lists of people wanting to buy houses. These are the same people who will be selling them to investors.
  2. Use biggerpockets.com. Your best resource is other real estate investors. Log on and ask who the wholesalers for your area are.
  3. Join local Facebook groups. You can ask other investors who the wholesalers are. Or, you can look and see what people and organizations are trying to buy cheap properties. Those will likely be wholesalers.

Other investors are a good resource for finding wholesalers, but of course, they’re also your competition. Once you find wholesalers, your next step will be to find a way onto their A-list.

2. How Do I Get to the Top of a Wholesaler’s Preferred Buyer List?

Before they send out a property to their whole group, wholesalers will send it to their best buyers first. They will want to get rid of it as quickly and efficiently as possible. If they can sell it without having to coordinate property tours and indecisive buyers, they will. 

So, how do you get on that list?

  1. Know exactly what you want. Don’t show up uncertain. Come with either cash in-hand or a hard money lender. They will want a smooth, no-drama process.
  2. Find lenders they work with. This way, the wholesaler will be confident that the deal will close, close fast, and close with no issues.
  3. Close the deal. If you get under contract with them, follow through with the deal, and do it as fast as possible. Don’t get into a contract unless you know it’s what you want. 

In general, you’ll want to cause the least amount of friction possible. After all, you probably feel the same way: the people who make things easy and enjoyable are the people you’ll want to work with over and over again.

3. How Do I Know If I’m Getting a Good Deal with a Wholesaler?

You and the wholesaler will have different motivations in the deal. They need to make money, so they may be “optimistic” with the numbers they tell you. To protect your interests, you’ll have to be proactive and realistic.

Double check their numbers. This includes:

  • The current condition of the property
  • The cost of repairs to bring it to market
  • How long it will take to get to market

It’s also important that you go in knowing your numbers. It will make verifying their numbers a lot easier, and it makes the process smoother for them (see #2 of this list). 

If you’re not sure how to plan these financials for a deal, have a friend or a contractor help you get an estimate.

The Wholesaler and Investor Relationship

A wholesaler will be a valuable member of your real estate investment team. Do everything you can to stay on their good side, but also be prepared to advocate for yourself in every potential deal.

If you need extra help with evaluating cash flow for a property, download our free loan optimizer at this link, or check out this video series on our YouTube channel.

5 Ways to Make Money in a Volatile Market

5 Ways to Make Money in a Volatile Market

5 Ways to Make Money in a Volatile Market

Check out our latest Market Watch videos here: https://youtube.com/playlist?list=PLb…

The current market is going CRAZY with increasing interest rates, rising inflation, and supply chain issues. As a real estate investor, how can you prosper in these times? In this video, we share 5 ways to make money in a volatile market. Check it out! STAY CONNECTED ========================

 

What is gap funding

What Is Gap Funding? And How Do You Get It?

When to use gap funding and how to attract lenders.

A mortgage covers the bulk of the cost of purchasing a new property. But what about all the costs in-between?

There are some big price tags in real estate investment that bank loans won’t usually cover. You’ll still need to find a way to pay for your down payment, the fix-up cost, and any carrying costs for the property.

How do you fill those gaps?

What is Gap Funding?

Gap funding is the money source you use to cover these extra costs in real estate. Private individuals can lend money to fill the gaps in your investment.

All real estate investors at any stage can utilize gap funding. Typically, gap funding is most useful to investors just starting out, who haven’t yet made or saved enough money to fund their own investments entirely.

However, we also see people who are already multimillionaires with years of investing under their belts use gap funding. It’s a great way to leverage investments at any level.

Where Do You Find Gap Funding?

You might find a few banks and other lenders who do gap funding, but the main way to get it is through OPM, Other People’s Money – think of it as Real People’s Money.

These people can be family, friends, or members of a real estate group. These people don’t necessarily have enough to fund your entire flip, but do have $20,000 to $50,000 sitting in an account or IRA. They don’t want to do the actual work and risk of investing, but they do want the potential for a higher return on their money than they’d get from a bank.

How Do You Get Gap Funding?

Getting people to loan you their money may sound easier said than done. After all, OPM is often either secured by second-lien or unsecured, so you wouldn’t put your money in that situation with just anyone.

There are a few key traits you’ll need to show to attract the people who can provide you with gap funding:

  • Respect their money
  • Protect their money
  • Be honest

Having these qualities will be the deciding factor in someone lending to you over another investor.

Respect Your Lender’s Money

Understand what your lender wants and expects out of the deal, and be sure they get it. Make them feel respected and confident with you handling their money.

Protect Their Money

Treat the money professionally – even more carefully than you’d treat your own cash. Be diligent in arranging the proper liens, proper insurance, and proper documents.

Be Honest

Tell your lender everything that happens with your project. They have a right to know what they’re investing in. It’s better to be straightforward and allow your lender to make their own decisions than to keep secrets about the deal until it comes back to bite you.

Grow Your Funding

If you make your lender feel good after the first transaction, they’ll want to come back for another. Good deals can lead to a web of funding. A lender who has a good experience with you will tell their family and friends that you’re a good person to lend to.

Respecting, protecting, and being honest with your OPM helps you grow. Investing is much easier with gap funding covered by OPM, and it’s possible to someday fund entire projects with OPM.

Learn More about Gap Funding and OPM

If you’re interested in growing your real estate investment business, check out the following resources:

Download our free OPM checklist at this link.

Learn more about gap funding and OPM with these videos.