Financing is key to purchasing investment real estate. Whether your paying cash or borrowing the funds, it’s the ability to have liquid funds for a quick real estate closing that helps ensure solid wholesale purchasing power. The Greatest Challenge in today’s dysfunctional real estate markets is permanent financing. I would challenge you that if your a Landlord, Wholesaler (flipper), and/or a rehab to retailer, you will constantly need to network in order to fund your real estate business.
The greatest problem a real estate investor is facing today: funding a deal. Do you agree? The common perception is there is no hard money, no private money, family members run scarce, and owner financing is far and few between.
Why do you think that is?
I challenge you to review your business plan and self -when finding adequate funds is hampering your ability to execute. More than likely the lack of funds is due to two problems. Undeveloped professional skills and a business plan that is not fundamentally built on a true cash flow plan.
What does that mean?
First off, I challenge you to put yourself in your customers shoes. How do you want to be treated. With 100% professionalism? Take a look at the top 5 people you admire. How do they present themselves to others and yourself. Typically one holds these people up on a pedestal. Why is that? Somehow it seems as though they are there for you right. It’s not all about them is it? They are there to help you and fulfill your needs right? They tend to speak eloquently, educated, and from the heart.
Ever run across the guy that tends to seem like its all about them, heavy pressure salesmanship, always knows all the answers, and/or full of just plain B.S? Do you ever feel like your not getting alot of responses to your products or even your attempts to sell? I’d suggest asking for feedback and constructive criticism. As hard as it is -if your open to honesty -you’ll grow.
Do you call (or email) people with your great wholesale (or flip) investment property for sale and/or the need to borrow funds (for that purchase) and the responses are so silent you can hear crickets? My generalized comment would be that you don’t have a deal and/or your investor is concerned with your professionalism. Let’s start at basics. First off you need to take 35% off of the TRUE After Repair Value of the home (some will argue in today’s dysfunctional market that a greater discount is needed). No -don’t bend it to the value of 2 years ago: be real. Then you need to back out the TRUE value of the repair costs. Then add in your wholesale fee. Don’t get greedy and tighten the margin. Sure in good times real estate investors would over pay and occasionally today you might get one off guard.
Let me ask you something though. Are you in this business for financial independence and freedom over the long haul? Then why push the numbers, squeeze out the profit margin for the one taking the real risk, and in general cut your nose off to spite yourself!?! It’s amazing how many real estate investment wholesalers and flippers I see that do this. As a generalization, I would say that those who pushed the margins to tight were the first to go out of business in the downswing too. Survival of the fittest right?
You see the idea is that you want your buyer/investor to come back again, and again, and again. In fact you want them so hungry for your product that you don’t even need to sell. How do you do that? Provide a good clear margin of profit with minimal risk!!!
If you can achieve those goals, then you will find all the buyers and/or funding you need. Whether your a real estate wholesaler, flipper, rehabber, or even landlord -the money will flow if the investment is truly attractive, cash-flowing, and secure.
Now take the blinders off, be open to criticism, take action to personally grow, and figure out how you can provide a true need for others -not just your wants. The money will come -seriously!