I have been training and educating real estate investors for 5 years and I’m going into my 9th year as a real estate investor and people always ask “how do I fund real estate investments?”
Funding, funding, funding, is always the #1 fear in the mind of most new investors and even experienced investors.
The truth is this, if you are a smart operator, and a good operating with a good deal – you will ALWAYS get funding.
There is always money for good deals, and never money for bad deals.
There are two parts to funding real estate investments:
#1 Are you buying this property at a discount? Why is this a good deal?
Getting a great deal in real estate comes down to finding it in one of three ways.
There are only three ways to win business and they are:
- Networking
- Marketing
- Negotiating
Off market deals and deals at a discount depend on you being a master at AT LEAST 2 of the above methods. When I started acquiring a dozen, two dozen, three dozen, and now 50-100 discounted homes per year, I got really good at networking and negotiating. In fact, when I sat in the acquisitions chair, I didn’t spend very much on marketing at all. All of my marketing was free.
Now that I have expanded my company and have an acquisitions team, I spend money on marketing, but that comes with scale.
Can you negotiate a great discount? If you can, fantastic, move onto step #2 below, if you want to become a better negotiator then check out my book on negotiation at Xnegotiation.com, George Ross, Donald Trump’s right hand man wrote the foreword and George negotiated most of Donald’s early real estate deals including Trump Tower and built his career.
#2 Private or Public funding
If you have a deal at a discount, 40-60 cents on the dollar and you think it’s a winner then you can take it in for private financing with a hard money lender or a private lender.
These types of lenders look at how good the asset is, and if they like the asset, they will invest and fund your deal.
Lenders and investors typically look at two things
- Do they like you as an operator? Can you bring this project over the finish line?
- Do they like the system you have for making money, aka the deal and your buying criteria?
If you fit both requirements, you will get funding, if you don’t then maybe you need some personal development or a different deal or system for making money.
Public funding is options like big banks or B lenders. These lenders are more traditional and if you have strong financials with your company or your job you can use them, and they traditionally have the lowest rates so they will save you a lot of money on the interest.
Getting your real estate deals funded is all about grabbing a great deal and is really about negotiating. Negotiating the deal, then negotiating the financing, if you can negotiatie you are king! If you can’t negotiate, then no one can help you.
Respect The Grind,
Stefan Aarnio
P.S. Check out my video series CapitalRaisingSystem.com for more tips on raising money
