Show Me The Money: Borrowing What You Need From Private Lenders
Youre going to market to find buyers anyway
Youre going to market to find buyers anyway. So why not spend some time doing some free and clear marketing. While youre out there advertising to people in probate, foreclosure, or behind oNow that youve found the property you want to buy, how much should you borrow from a private lender? The answer is simple: borrow what you need, but only as much as you need. The key to getting the money you need is to make sure the private lender feels safe. After all, this is their money that youre dealing with here. Lets look at an example:
Lets say you are buying a property thats worth $100,000. You decide you need a loan for $10,000. At this point, the private lender should be looking at your loan as a no-brainer; the loan is completely secure (by the property) and its also a first mortgage! Private lenders are more likely to loan for first mortgages than seconds.
On with more of our example. Youve got a mortgage on your property now. Whats the value of that private lenders mortgage? Well, its a $10,000 loan, $90,000 is equity. Thats a pretty sweet deal for the private lender.
Borrowing what you need makes it so much easier to get your deal funded. Smaller amounts of money are always easier to recuperate if something should happen to the property. Back to our example. Maybe you lose the house to a tornado, heaven forbid. Your insurance wont help you out at this point, but you could sell the property for $10,000, right? Or, what if you lost the house to foreclosure? A year or two later, the private lender could resell the property. The private lender is safe with loaning you the amount you need.
Borrowing what you need to get the deal done is smart for you and the private lender. When borrowing a small amount compared to the houses value, the lender is very secure. In the end, both you and the private lender will be happy with this type of transaction. How much should you borrow from a private lender for your new property? Simple. Borrow what you need to keep you and the lender happy.n payments, its a smart idea to target those who own their properties free and clear. You just have to find those people.
Statistics from the Census Bureau show that about 30% of properties are owned free and clear. Thirty percent! Free and clear home owners are out there, many looking to sale their properties.
First thing youve got to do is get a list to start your free and clear marketing. Free and clear home owners are out there. It you want to start marketing to these owners, youve got to get a list of who they are. Get a list of homeowners with no mortgages that have three or more bedrooms, 1,500 square feet, or whatever kind of property it is youre looking for. Be specific when getting your list because you dont want to be stuck with a property that buyers wont be interested in.
Once you have the list there are several ways you can start free and clear marketing.
1.Send a postcard. Sounds easy enough, right? Simply send a postcard to those on your list. Youll want to put catching wording on the postcard that will catch the sellers attention.
2.Classified ads. Just like with traditional real estate advertising classified ads announce what type of property you are looking for. Place ads in local newspapers, big and expensive newspapers, small newsletters, and even places like the Thrifty Nickel. Every major and small metropolitan area has publications that are available for advertising.
3.Online ads. Places like Craigs List and Postlets are excellent outlets for advertising. Youll get a lot of exposure for minimum investment, if any investment at all. A simple Google search may help you find even more places to advertise online.
The tips mentioned here are just a beginning. To start free and clear marketing, youre going to want to make a list of all the places you can look for homeowners. Make your advertising methods work for you, no matter what type of seller you are going after.
by: Alan Brymer
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