Hard Money And Funding Your First Deal

A lot of people want to try their luck in real estate investing today

. Most of them, however, do not have enough capital to start in this business. There are actually many ways to finance deals if your personal money will not suffice. Hard money is perhaps the most popular funding used by those starting in rehabbing and other forms of real estate investing. But before we discuss hard money, lets tackle other financing methods.

Naturally, you can borrow money from banks and credit unions. Known as traditional lenders, many of them still lend money despite the economic slowdown. However, they might not be the perfect answer to your problem if you want to start in real estate investing. For example, you want to try rehabbing. If you borrow from banks and other traditional lenders, chances are you will only get he money you need to purchase the property. As for the repair, closing, and other costs, you will have to fund those expenses using your own money. If you dont have that much in your bank account, there are still other ways to augment your finances.

Some investors started in rehabbing by pooling together money from credit card loans. What they do is open many credit card accounts and get whatever they can from these lines. However, this is not advisable for those who are not too good with bookkeeping as you can lose track of your payments when you deal with multiple accounts. Also, you will encounter difficulties in doing this if you have a bad credit report or score.

Another way to start is to convert your other assets to cash. You may pawn some of your properties like your car, home appliances, jewelry, and even your home to get money. You can sell assets you think you can live without, at least while you are starting in the business. This, however, is very risky.

What is most advisable is that you apply for hard money financing. While it does not happen all the time, a hard money loan is usually enough to shoulder all your expenses when you start in real estate investing. For example, if you want to try rehabbing, you can buy a property and repair it using this kind of funding.

These kinds of loans are computed based on the after repair value (ARV). You Are likely to get between 60% and 70% of the ARV, or the estimated value of the property after you rehab it. This amount is often enough to cover the purchase price of the property and repair costs. That means that with hard money, you get to rehab a property without having to spend personal money. Learn more about rehabbing, hard money, and real estate investing at REIwired.com today!

by: Daniel Mc Grey

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