Private Money

How and where to get the money to invest in real estate

I always have people ask me:

  1. Where do you get the money?
  2. Where do you get the credit?

Let me answer these questions right up front. You do not need money or credit to start. I am going to give you some resources that will help you, I’m going to show you how to get money later on when you need it. These are the very same resources I use on a daily basis. After you get some deals under your belt, work on getting your credit fixed. More opportunities open up using your own credit as you go along. So, If you have bad credit, Get it fixed.

When you start investing with your own credit, your credit will start to take “hits” when you buy more than 10 houses. I am going to share with you how I have overcome those challenges too. You no longer will have an excuse to get started.

Here are some places you can use to find money. I would suggest working through:

  1.  Small local banks in the city or the town where you are investing in.
  2.  HELOC – Home equity line credit line.
  3.  Family members, friends
  4.  Partners. Ask in your local REIA club.
  5.  Personal line for credit
  6.  Lines of credit through banks
  7.  Corporate lines of credit: I love this one as they do not use your personal social security number, yes, you are responsible, and guarantor of the loan in many cases. In the beginning if you don’t have a history or have lines of credit, but what’s great is, if you have a social security number you can get as much money only based on that social security number for a certain limit of time. Lines of credit are tied to LOC, so you can have as many LOC’s as you want. I now one person who has 12 Lines Of Credit (LOC) $50,000- $250,000 each. Imagine, what if you get one $50,000 LOC, and then you can leverage that out, putting 10% down on buying houses. We recommend:

8. Private Money ( NY Times quoted 350billion in loans through sites like these in the past four years)

9.   Hard Money. Hard money is awesome resource. These lenders lend up to 65% of the ARV. So I use lenders who will give me the: acquisition cost, (money for the property), money to fix it up and the money for the closing costs. 

10.  IRA Account – Use your own self directed IRA. The company from which I learned a whole lot about doing this is through a company called Entrust. www.Entrust.com . If you haven’t open a self directed IRA account yet,please do so, it’s a great way to fund deals.

11.  Peer-to-peer lending websites – You can go there and say, ” I need 20,000 to buy real estate”, and people will bid on loaning you money. They might say I will give you 5,000 on 18%, or 10,000 on 6%. And they bid on you to give an interest rate, and you see the bids by people to fund your deal. It’s a concept we have used many times. It’s a really great web-site, I have a lot of students who have succeeded that way.

a)  www. Prosper.com
b. www.Lendingclub.com

10. Transactional Funding – Absolutely the best for flipping houses.

*** Personal Credit Repair:  There are lots of places for fixing credit. I am a bit skeptical about many credit fixing services. Many of my tenant buyers have been burned and I have heard many stories from my students. There are few places where we trust our credit:

  1.  TrinityCreditService.com This company is run by two men who have worked in the credit industry for a long time and do so in a full moral and ethical way.