A Real Estate investor skill set is very broad. They have to learn marketing, rehabbing, investment strategies, types of funding, asset protection, accounting, land lording techniques and on and on and on...But one of the most difficult skills to learn is how to properly fund a Real Estate transaction. It is easier to FIND
a deal than it is to FUND
Each asset acquisition is unique and requires different funding strategies. The funding required to purchase a commercial property will be completely different from a single family home purchase. While negotiating with the SELLER a good real estate investor will try to do the following:
- Make sure your seller is a MOTIVATED SELLER! If they are not motivated they will not negotiate and you must be prepared to WALK AWAY from the deal.
- Lower the PURCHASE PRICE to the Maximum Allowable OFFER MAO - This is the price the investor thinks will allow him to purchase the asset, repair it and make sure the asset cash flows.
- Negotiate the terms of the note.
- Will he/she take a no money down deal?
- If the asset is not cash flowing, will he/she defer payments until it does?
- Are the sellers willing to HOLD paper?
- As you do more real estate deals the better you will get at negotiating with the SELLERS but I think you get the idea.
- Remember, you will have to walk away from several deals if the SELLERS are not flexible with terms and price.
Once the agreement has been reached and both the SELLER and BUYER have placed the price and terms in writing it is time to figure out how to execute the transaction without any problems. A good investor always has cash available to take advantage of opportunities but sometimes the investor's cash is tied up on another deal.TIME to BORROW other People's Money!
Investors have to learn to identify what type of funds they should borrow based on the deal's parameters negotiated earlier. Below is a list of lenders that you can work with based on the type of funding required. Web Links are included.