Funding Great Property Deals

Besides finding great property deals, one must be able to fund these great property deals. There is no rocket science on how to do this.

1. Work with a bank. Actually easier said than done. Plus the costs and speed it is not really one of the best options. One needs to be an athlete to jump through all the hoops and requirements. However if you have a long time job, low debt, experience this could one of the cheaper options.
2. Private lenders. These lenders can be friends, family or even someone you might have met in a property meet. They are not a professional lender in most cases however looking to get a better return on their money. You can assume potentially 5-8% on a yearly basis. The way you find these private lenders is tell everyone what you do and have done. Show them how much you have made on your deals. Show them that their money is safe as you buying only good deals. Demonstrate this with examples
3. JV finance. This is the next level of expense for your deals. You can have 2 levels of JV partners…active or non active. Anticipate to split the profits of the deals. Do not mix your money with theirs. The funder puts up all the money in most cases and even has ownership in the property. To protect yourself have them agree to place a RX1 ( restriction on the property) .This means they can not sell out the property and cut you out.
4. Bridge finance….This is the most expensive and potentially the most risky. Time works against you. You need to budget for this expensive finance, however in property there are always unexpected issues. These unexpected can increase time….time is money. If the deal is tight you can be upside very quickly. Plus in many cases there are personal guarantees required. Bottom line….Least preferred…

Our JV partners and us fund our deals with family money earned over very long times….The key is we buy without a mortgage, thus we can get deals from estate agents. We use a buy to sell principle in order to compound moneys to keep more of our Social housing HMOs. Establishing relationships with estate agents is the key to our success. We are one of the first calls for a deal. For instance we are buying a property in Manchester a stone throw from a hospital for a discount of BMV of almost 40%. The property needs a great deal of work however our surveyor inspected the property and assured us after works it is mortgageable.

Funding is really not that complicated….the key is finding the deal. Finding the deal is not rocket science as well. It is though, hard work.