The Inside Guide to Funding Real Estate Investments

How to Get the Money You Need for the Property You Want

The Inside Guide to Funding Real Estate Investments

Author: Ross Hamilton
Pub Date: November 2017
Print Edition: $19.95
Print ISBN: 9780814438855
Page Count: 240
Format: Paper or Softback
e-Book ISBN: 9780814438862

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Table of Contents

CONTENTS

Foreword xv

Introduction xvii

1. The Big Picture of Real Estate Investing 1

The Vehicle and Strategy 1

Three Common Real Estate Investment Exit Strategies 2

More About Exit Strategies 5

A Path to Success 6

2. An Overview of Funding Options 9

Traditional Mortgage Lending 10

Asset-Based Loans 10

Private Money Loans 11

Crowdfunding 11

3. An Introduction to Asset-Based Loans 13

Is Asset-Based Lending What You Need? 13

The Good, the Bad, the Ugly, and the Facts of Working 
with Asset-Based Lenders 15

4. An Introduction to Hard Money Lenders 17

Can Hard Money Lenders Be a Good Source of 
Funding for You? 17

Who Uses Hard Money Loans? 18

5. What You Need to Know About Private Money Lenders 21

Can Private Money Lenders Be the Answer for You? 21

Who They Are 21

Two Types of Private Money Lenders 22

How to Find Private Money Lenders 24

What Lenders Want 24

The Importance of Relationships 25

The Benefits of Private Money 26

6. How to Take the Mystery Out of Private Money 29

Is It Really Possible to Borrow from Private Individuals? 29

The Components of a Private Money Loan 30

A Sample Deal 31

Putting It on Paper 32

7. Thinking of Crowdfunding Your Deal? 35

The Basics You Need to Know 35

The Basic Model 36

When Does It Make Sense to Crowdfund a Deal? 37

What About Debt vs. Equity? 38

The Cost to Raise Capital Through a Crowdfunding Platform 38

8. The New Kid on the Block: Crowdfunding 41

Is Crowdfunding a Good Option for You? 41

Why Do It? 42

How to Participate in a Crowdfunded Property 43

When Are Returns Received? 43

How Do Investors Earn Returns? 43

Due Diligence 44

9. Partnering to Get the Funds You Need 47

When Should Property Investors Consider a Partner to 
Obtain More Funding? 47

Real Estate Partnerships 101 47

Advantages of Partnering Up 48

Potential Cons of Partnering Up 48

Smart Times to Partner Up 49

Who Can Investors Partner With? 49

What and Who to Avoid When Pitching Potential Partners 
for Money 50

How to Make It Work 51

10. Using Banks to Fund Real Estate Investments 53

Are Banks and Traditional Lenders a Viable Option? 53

What It Takes to Fund Investment Property 54

Why Traditional Lenders Have Turned Away from 
Funding Investors 55

Pros and Cons 56

Alternative Strategy 58

11. How to Find Asset-Based Lenders 61

Who Makes Asset-Based Loans? 61

The Traditional Method of Finding Asset-Based Lenders 62

The New Way to Find Asset-Based Loans 63

12. Inside the Mind of Asset-Based Lenders 65

What Do You Need to Know to Get Your Deal Funded? 65

The Six C's 66

What Scares Lenders Away? 67

What If You Can't Repay? 68

What's Your Next Step? 68

13. Asset-Based Lenders: A Peek at Their Cards 71

What More Do You Need to Know About How 
They Operate? 71

How Asset-Based Lenders Make Money and How It Works 
to Fund Your Deal 71

Key Areas Where Asset-Based Lenders and Their Capital 
Partners Make Money 72

14. Dealing with Down Payments 75

Five Ways to Secure a Down Payment for Real Estate 
Investment 76

15. The Dirty Truth About Some Real Estate Lenders 79

Are You Ready for the Truth? 79

The Unstoppable Money Machine 79

Eight Common Lender Scams 80

Overpromise and Underdeliver 82

Tips for Finding Lenders You Can Trust 83

16. Hard Money Lender Scams and How to Avoid Them 85

Fees 85

Johnny Come Lately 86

17. How to Successfully Get Funded as a New Investor 89

Specific Challenges Facing Newer Real Estate Investors 89

What to Look for in a Real Estate Lender 90

How to Improve Your Funding Success as a New Investor 91

18. How to Land the Best Loans for Your Deals 93

Finding the Best Financing for Investment Property 93

What's So Important About Finding the Right Loan? 93

How to Match Loans and Lenders to Your Needs 94

Financing a Real Estate Investment Using Different 
Real Estate Strategies 95

Comparing Loans for Your Real Estate Deals 97

Quick Tips for Quickly Homing in on the Best Loan Programs 97

19. Is Your Baby Ugly? 99

The Due Diligence Steps Every Real Estate Investor 
Should Take 99

Everyone Thinks Their Baby Is Beautiful 99

How to Screen for Money Makers 100

Rules of Thumb 101

Confirming Property Values 102

Is There a Lender for This Deal? 105

20. Estimating Your Project's Costs 107

How Much Is Your Property Renovation Project Going 
to Cost? 107

Knowing Your Customer and Your Exit Strategy 107

Inspecting and Evaluating the Property 108

General Rules of Thumb 109

Avoiding the Traps 110

Funding and the Numbers Game 112

The Scope of Work 113

Tales from the Trenches 113

Collaborating with Partners 114

Coordinating Contractors 114

Running Out of Money 114

Seven Steps to Your Scope of Work 115

21. The Time Value of Money 117

Don't Underestimate the Value of Your Time 117

The Time Value of Money 118

22. What Every Investor Needs to Know About Terms, Cash Flow, 
and Formulas 121

Do You Know What You Don't Know? 121

MAO or the 70 Percent Rule 121

The Wholesaler's Formulas 122

An Alternative to the 70 Percent Rule for Flippers 123

Net Operating Income 124

23. The Hole Poker: The Devil's Advocate 129

An Important Part of Your Real Estate Investment Team 129

Emotional vs. Fact-Based Real Estate Investment 129

The Value of Second Opinions for Funding 131

The Hole Poker 131

Where to Find a Good Hole Poker 132

How to Get a Great Hole Poker to Help You 133

Knowing When to Go Your Own Way 133

24. Next! Know When to Walk Away from a Real Estate Deal 135

The Bite Test 135

Taking a Hit 137

Living to Fight Another Day 138

Plenty of Fish in the Sea 138

25. Dealing with Detours 139

The Power of Plan B 139

Ten Detours to Take When Things Don't Go as Planned 139

Important Considerations for a Successful Venture 140

26. What Comes First? The Deal or the Dollars? 141

Getting Ready to Be Ready 141

Putting the Horse Before the Cart 141

Finding the Right Funding Sources for Your Deals 142

What You Need to Get Going 144

27. Preparing to Get Your Loan Funded 147

Failing to Plan Is Planning to Fail 147

Planning for Success 147

What You Need to Fund Your Deal 148

Mortgage Forms and Documents 149

Scope of Work 150

Closing Documents 150

Quick Tips for Setting Up a Smooth Funding Process 150

28. Who to Take with You 153

The Real Estate Professionals You Need to Close the Deal 153

Seven Real Estate Pros to Have on Your Side 153

29. Estimating Your Time of Arrival : How Long Does It Take to Fund and Close a Real Estate Deal? And What Can Real Estate Investors Do to Streamline the Process? 157

How Long Will It Take to Close? 157

Steps Involved in Closing a Real Estate Deal 158

Things That Will Slow You Down 159

When You Close--Watch the Calendar 160

Three Roadblocks to Watch For 160

Preparing for Closing Day 161

30. Avoiding Costly Borrowing Mistakes 163

Understanding the Underlying Costs of Funding 163

Earnest Money Deposits 163

Real Estate Contract Contingencies 164

Due Diligence Costs 165

Buying Property Sight Unseen 166

Sabotaging Your Loan Application 166

Title and Lien Searches 167

Accurately Forecasting Closing Time Frames 167

Failure to Hit the Ground Running 168

31. Investment Property Loans: Everything Is Negotiable, Right? 171

The Toll Booth--How Much Will It Cost to Get 
Your Deal Funded? 171

The Power of Leverage 171

Borrowing Costs + Investment Strategy 172

Common Borrowing Costs and Fees 173

Everything Is Negotiable, Right? 173

Negotiating Smarts 174

Quick Tips for Negotiating Better Loan Deals 175

32. How to Choose the Best Funding and Investment Property 
Lender to Meet Your Needs 177

Taking Different Paths to Reach the Same Destination 177

Picking the Right Lender for Your Project 177

The Importance of Investor-Lender Relationships 179

The Reality of the Lender Relationship 179

Investment Property Lenders Need You Too 180

33. High-Performance Property Financing: Understanding 
the Mechanics of Your Loan 181

How to Keep Your Loans Rolling Through till Closing 181

Just How Much Does It Matter? 181

How the Loan Process Works 182

Managing Your Loan 183

What to Expect at the Closing Table 184

Being Prepared to Close: A Checklist 184

Post-Closing Considerations 185

34. Fix and Flip Strategies to Get Your Investment Property Sold 187

What Smart Tactics Can Help Real Estate Investors Go 
from Flip to Flip with Ease? 187

Tips for Fixing and Flipping Fast 187

Renovate to Your Target Market to Sell Fast 188

When to Start Marketing for Resale 189

Choosing the Right Real Estate Marketing Formula for 
Your Deals 189

Reselling the Property 190

The Buyers List 192

35. Buy and Hold Real Estate Investment 195

Maximizing Income Property Opportunities 195

Refinancing and Optimizing Financial Leverage 196

What's the Best Leasing Strategy? 197

Intelligent Tenant Screening 198

Property Maintenance and Management 198

36. Keep Fueling the Journey 201

Lap After Lap 201

Performance-Boosting Analysis 202

Quick Tips for Tuning Your Engine 202

The Reality of Deal Flow 203

Tips for Improving Deal Flow 203

Relationships 204

Curated Real Estate Deals 205

Get Help 205

37. When Your Lender Takes the Exit 207

When Lenders Bail 207

Why Lenders Bail 207

How to Recognize the Signs 208

What to Do 209

Preventive Maintenance 210

38. When Your Rehab Goes South: What You Can Do When 
Your Rehab Takes a Wrong Turn 211

Why Rehabs Go Wrong 211

Coping with Over Budget Issues 212

Where to Save 213

Where Not to Skimp 213

When Investors Need More Money 214

Working with Your Lender When You Need More Money 214

Other Capital Sources 215

Four Strategies for Turning Your Rehab Nightmare 
into Cash 215

39. What If You Can't Make Good on Your Investment 
Property Loan? 217

Why Investors Can't Pay Their Loans 217

Knowing Your Options 218

What Happens When Investors Don't Pay Their Loans? 219

Alternatives to Foreclosure 220

Effects of Foreclosure on Real Estate Investors 220

40. When the Wheels Come Off Your Real Estate 
Investment Venture 223

It Happens to the Best of Us 223

Why Do Real Estate Investors Fail? 224

Tips for Preventing Failure in Real Estate Investment 225

Tips for Getting Back on the Road to Real Estate Riches 225

Opportunity Is Knocking 226

Index 227

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