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Step Two - Qualify
Financing an investment property doesn't need to be difficult. But, before you look into the different financing options that you may have available, you first need to determine your investing strategy. Are you planning to buy and hold? Buy, rehab and flip? Control and assign? Lease option? Buy and rent? Wholesale? Sounds confusing doesn't it? It is actually very simple.
Your investment intentions will determine the financing. Let us explain.....
If your investment strategy involves short term holding of the property,as in buy, rehab and flip or wholesaling, the terms of the loan don't really matter to you, provided you dispose of the property in a timely manner. You would look at acquisition costs closer that interest rates or payment amounts. If you are looking at holding onto the property for whatever reason, you may want to focus on either refinancing opportunities, partners, or more conventional means of purchase to keep the payments down.
We get into the different kinds of investing in another section. The idea of step two is to get you ready for future deals. To be ready to pounce on deals as they are made available to you, without having to worry about the funding. So let's dive right in....
If you have credit issues that you are dealing with in step one, and need a quick fix to begin investing, hard money or private money may be the answer you are looking for. The term hard money as it is referred to in the real estate and/or lending business has a number of meanings stemming from it's root "hard money," meaning cash money. Hard money loans has developed through the years to include non conventional real estate loans, (privately funded loans, second deeds of trust, and equity loans). Usually a loan where the lender can approve the real estate loan request based on the real estate equity in the deal, side stepping much of the usual time consuming aggravation, and verification that, for example, a bank might require to lend that same amount of money.
Hard money loans of today are those loans that are usually funded at higher costs to the borrower in exchange for the ease of obtaining a fast cash type, no red tape loan.
Example: Mr. Smith (a physician) goes to his bank and borrows $50,000 at 9% with no loan fees, because he has a flawless credit report and can afford to wait several months to get his check. Mr. Jones is on welfare, is in a coma and sells Amway for a living, but has sufficient real estate equity and obtains a $50,000 hard money loan against the equity in his property for 10% interest plus a four point loan fee, and he gets his check in 10 days.
Loans come in all types, shapes and sizes, and Mr. Smith wouldn't hear of paying 10% with his flawless credit report, whereas Mr. Jones has no credit and is more than willing to pay 10% and four points in order to get his loan quickly.
Even a borrower with flawless credit may, on occasion, be willing to pay a little more to obtain a hard money loan if he is in a hurry and can't afford to wait weeks or months for a traditional lender to gather up and pour over verifications of everything he has, does and is, in order to get to the closing table.
For the purposes of getting you ready to purchase good deals as they are made available to you, we suggest you get approved by a hard money lender to use as a safety net while researching other options. Use the links we have provided to download our newest ebook, learn more and find a hard money lender in your area.
You may also want to complete our easy mortgage application by clicking below IN ADDITION to finding a hard money lender in the new ebook. We will submit your application to known lenders who have expressed an interest in your application. This is another unheard of FREE service to our members. Click HERE to fill out the Easy Application.
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