Private Funding

Posted on February 28, 2014 by

If you are a full time investor or just getting started, you may have noticed that inventory is not what it once was. Many real estate investors see this as an issue but as always by finding a win-win situation I found a resolution to their issue. In the last two years my focus has been in buying houses to renovate and resell. Occasionally, I end up having to wholesale due to having more deals than we can purchase. On the other hand, there are investors that have difficulty finding a good deal. As a result, their money is not working for them. It only made sense to find a way to work together.

There has always been a demand for investment real estate properties on classified sites like Craigslist. Everyone has seen the “I Buy Houses Cash” ad but recently there have been ads like “I have plenty of cash for real estate and not enough deals.” I know what you’re thinking, “It’s the same ad but worded differently.” Well, I thought the same thing at first and ignored it. I also thought they were placed by a company/ hard money lender disguised as a private lender. After seeing a few different ads similar to this I decided it was time to do some investigating. A few of the ads were hard money lenders, companies, wholesalers, etc. However, a few were legitimate investors looking for more inventory and they were willing to work together. Of course they preferred to purchase the property and be on their way but I presented an alternative.

I asked if they were willing to lend on the property and make a respectable return. I explained that worst case scenario his investment would be secure by a first lien position and if I walked away from the project he would get the property all to himself, which is what he originally wanted. If everything goes as planned, which is usually the case, I would use the funds to remodel the home, sell it and at closing he/she would collect the agreed to interest payments. The main objection was that he would not be making as much money compared to him doing it himself. I agreed and asked how many properties he currently had and the amount of quality properties he had seen in the last few weeks. His response was what I expected. He mentioned seeing plenty of deals but they were always going into highest and best. When the home closed and the sold price was published it was much higher than what he would have ever considered offering. Because we offer our deals on a first come basis he is only competing with other funding investors on who pulls the trigger the fastest. By this I mean, the first to deliver a contract and down payment. Plus, he does not have to deal with contractors and/or any other rehabbing headaches. He saw the value in this and we are now on our second investment together. This can also benefit newbie investors who find deals but may have limited funding. As a newbie you can joint venture and learn from the funding partner who may have plenty of experience you can learn from.

Just like any other entrepreneur I saw a need for investors and provided a solution. If you look at challenges or hurdles in this way, you will be able to adapt to the changing real estate environments now and in the future. Keep in mind that this was the solution for one type of investor. I partner and joint venture with many other investors and each one is a bit different but at the end of the day it is a win-win for everyone involved.

Michael VazquezMichael Vazquez has been offering properties to real estate investors significantly below market value since 2006 in both Texas and Georgia. Michael taken on projects starting with just 4 brick walls (literally) to managing his own rental portfolio. When it comes to investing in real estate he has done much more than many twice his age. Michael is always looking for more investors to work with.

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