I know there are tons of new real estate investors now wanting to capitalize on this ground breaking opportunity to grab a few foreclosures at pennies on the dollar.  The primary challenge you all have is funding.  Funding your real estate deals can be done several ways.  These are the secrets that they don’t tell you when you first start to review these ‘how to’ articles.  You may know how to do a short sale and you may know how to find a home with equity that’s in foreclosure.  You may also know how to find buyers.   In this article we will cover how to get massive amounts of funding for your deals immediately without the bank!

Home Equity Line of Credit

The first strategy that is used by many to become very wealthy in real estate is their existing home equity line of credit.  Didn’t you buy your home so that it can be an asset to you?  Why are you sitting there letting that asset build equity that you are not putting to use?  What if you lent yourself 10k, 15k, 40k or more?  Be a professional about it though!  You know these payments are due on your HELOC every month at very low interest rates.  So, be smart and lend your real estate LLC or Corporation the money at double the rate!  Then use the interest earned to pay down your HELOC and/or pay down your principle.  If you cannot pay that money back to yourself every month then DON’T DO IT!  You must have a rock solid exit strategy.  That means, don’t you dare take ownership to that property until your short sale is negotiated and you have an end buyer approved and lined up.  If you are dealing with a property with plenty of equity and you just need to take over the deed but want to pay the person something to move…Don’t do it!  Not unless you are going to hold that property and you KNOW what you are going to do with it.  If you are flipping the property to an end buyer, once again wait until you have the end buyer before taking over that property.  The last thing I want you to do is take on another liability that may ruin your credit rating if you cannot make the payments on your HELOC or even worse jeopardize a foreclosure on your own home.  Then you have major issues!

Friends, Family and Business Associates

Who do you know that wants to partner with you on your business?  Let them know what you are doing; tell them about your exit strategies and what type of return they can get on their investment!  I don’t care if you are borrowing money from your mom; make sure you pay interest on the funds.  Right now most can’t even get a 5% return on a money market acct or CD!  What if you offered them 8-10%, had a successful transaction and returned the funds in 30-90 days?  Do you think you that person would beg you to give you money the next time?  If you’re smart you will run your real estate business like a true business.  Give your friend or family member a 1^st or 2^nd position mortgage against the property or a promissory note whichever is appropriate for the situation.  Your professionalism will shine and you will have them telling other friends and family members how they made money with you! 

Roll Your 401k or Roth IRA to a Self Directed Real Estate IRA

This is a special IRA that is only for real estate and a fantastic way to build wealth with the money you already have.  Once again, you should follow the steps I advised forborrowing money from your HELOC.  Remember you only want to borrow when you have an absolute sure thing profit margin.  Be very careful about what you think a sure thing is!  Consult with me here on the comments section of this post or go to http://creonline.com. I have discussed MANY deals with other real estate investors on this site. 

Personal Guarantee Loans

There are several sources for these types of loans.  The one thing you definitely do NOT want to do is go to your local bank and ask them for a loan to buy real estate!  Do you remember what just happened?  I don’t care if you have an 850 mid FICO score; you may be turned down because all banks are taking an offensive look at real estate right now and consider real estate investor loans to be very risky.  So you want to go to your bank and ask for a personal guarantee loan for debt consolidation.  You can usually get between $2,000.00 and $10,000.00 with a mid FICO score of 660 or better.

You can also check out peer to peer websites for funding.  The sites will lend up to 25k!  No collateral is required and these groups are great if you have a mid FICO score of 620 or better.  If your story is good enough to attract attention you may get funded!  The great thing about this is that the money is managed by the main site but thousands of people are looking for people to lend money to!  Let’s say you need a 25k loan, you may get $100 from 10 people, $500 from 6 people $50 from another 20 and so on until the loan is completely funded.  I recommend http://prosper.com and http://lendingclub.com. There are several others out there you can try also just Google peer to peer lenders to find others!

Now Finally, Hard Money Lenders

They are not off the map just a little harder to find these days because many of them have gone down with foreclosures that they have to sit on but there are still a few out there that I use.  Please check out my related post on this subject on How to get hard money funding in today’s market. Preparing your package is utterly important!  These guys will not work with newbies right now.  Additionally, just to save you the headache of searching I will tell you right now; they will definitely not touch anything below 50k and most will not touch anything below 100k and that’s the loan amount needed not the ARV; believe me I have tried!  I had a deal early last year that was an REO in Milwaukee, WI Ocwen had it listed for 20k, I offered $7500 and we settled at $8,000.00.  It needed about 15k in work and the after repair market value was on the absolute low side at 70k easily.  I had buyers ready and qualified to buy it upon completion!  So I needed 25k to make it even.  There wasn’t one lender in the country that would be bothered with it!  I had several lenders that would give me transactional funding but this was a rehab deal.  So the property needed to be fixed up prior to selling it to my end buyer.  We had to come up with our own cash to do the deal and I sold that one for 65k upon completion J

First of all what you want to do is find your local REI clubs, attend a few meetings and find out who’s lending what!  You can also look in your local newspaper to find lenders.  Check craigslist.com in the finance section.  Join http://Partnerup.com and post a request for funding with as much detail as possible.  Once again, go to my favorite REI site http://creonline.com and post your deal with a request for referrals to lenders.  You can also see if your local REI club has a site and request a referral to lenders there. I have found lenders for my deals with all of the above.   Last but not least there is a great lenders list at http://reiclub.com this is another favorite for real estate information. 

Business Lines of Credit

If you are just getting your corporation going this will not work, you cannot fund your deals with a new LLC or Corporation.  Because you cannot get cash lines of credit without a strong guarantor with a 700+ mid FICO score and even then without seasoning on your LLC or Corp its tough!  Not impossible but tough!  I would also beware of companies that will sell you a seasoned corporation with a  claim that they can get you 100k in a month or 90 days if you pay $10,000.00 and other crazy shenanigans like that.  Right here on the Achievers Only! Network you can get all the information you need to build corporate credit which will take time. But you obviously want to start right away.  Don’t wait until you have a deal to do it because you will not be able to build your business presence fast enough to fund your deal.  If your corporation or LLC is already 2 years old or more then you don’t have to start from scratch and doors will open alot faster for unsecured lines of credit and unsecured SBA Express loans etc!  For only $19.95 per call I have put ALL of my referrals for getting vendor credit, JV funding, LOCs, Business credit card funding and much much more.  You can call the hotline at 1-866-732-HELP (7232) press option 1 and get the info!  I am undercutting ALL of my competition because I am sick and tired of the scams going around when it comes to business credit.

I hope this information has been helpful to your stepping stones to ultimate success.  Remember, don’t waste your time doing one strategy or the other, do it ALL!  So, when you have a deal, find funding in all places!  Because timing is of the essence and you must close quickly so you don’t want to waste time waiting to see who is going to say yes while days and weeks are passing you and your deal by!

Ok, I have to narrow down my focus.  Finding hard money loans and preparing packages takes up too much of my time.  So I am going to give you my personal hard money funding techniques that get my deals funded time & time again.  These tips will help your hard money lender make a decision allot easier.  These tips have taken me years to develop and I am passing them on to  help my fellow investors cut years off of the learning curve!  There is so much business out there right now you want to take massive action and you would prefer not to have your deal get shot down because you didn’t package it correctly!

Hard Money Loan Package Summary

A.  Know your ARV (After Repair Value).  You MUST know your comps.  If you think hard money lenders will do it for you think again.  There’s too much business out there.  What are homes selling for in the neighborhood today?  If there aren’t at least six comparables of recent sales in the last 3 months (Forget about 6) then your deal probably will not be funded! I use several websites to find out this value.

1. www.hvasoftware.com This system will pull comparables from eppraisals.com, cyberhomes.com and zillow DO NOT assume the value it comes up with is correct.  You then have to research each comp.  make sure its within a half mile to a mile of the home and the comps are within the last 6 months!
2. www.trulia.com Type in the address then review the recently SOLD comparables
3. www.realestate.yahoo.com
4. www.propertyshark.com This is a GREAT tool because you can give it specific parameters.

When reviewing your comparables, if there were many short sales and foreclosures in the area you will know because of the large difference in price.  You may need to review property shark for each comparable and look at the title history.  With this you can tell weather the last sale was a short sale or foreclosure.

B.  I normally provide my lenders with a market analysis also.  You can get this from www.cyberhomes.com

C. With the popularity of YouTube now besides pics of the home, to get hard money funded you should also provide at least a minute of YouTube video of the property and the neighborhood.  I recommend owning a flip video.  Just make sure you record the neighborhood, the outside and inside of the home.  Be careful not to go too fast or too slow on your recording.  Just the facts, slow enough for someone to see what you see.  The eye is quicker than the camera so the camera takes another half a second to see what you see.

D.  Last but not least create your executive summary.  This should be no more than two pages and include a summary of the property.  What you are looking for and a brief resume summary of your background.  Because so many investors have walked away from projects they really don’t want to lend to a newbie.  But if you are a newbie highlight experience that you have relating to the industry.

Last but not least…You want to gather your info then put it all in a neat little pkg.  Within the first paragraph of your executive summary you need to get out what you are looking for, how much time it will take you to return their money and a little bit about yourself.  Of course, you want to make sure they continue to read all of the details you have provided!  I hope this helps!

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