How to Buy Real Estate During the Post Credit Crisis Storm
As the stock market tumbles and a most mortgage lenders go out of business how does the average guy manage to continue to invest in real estate. We certain will not be able to get traditional mortgages from banks or lenders as they now require 800+ credit scores, personal guarantees and down payment collateral equal to or greater than 40% of the purchase price. hard money lenders are so scared they will not lend to their own mothers - that is, the few that are still in business. So what do real estate investor do now!
Private real estate money is the answer. So what is private real estate money and how do i get it to purchase real estate investments.
Private real estate money is simply borrowing money directly from private individuals rather than a bank or other commercial lender. Private lenders tend to be ordinary people such as doctors, lawyers, accountants, business owners and possible retired people. Most private lenders are simply looking for better investment returns than they can typically get from bank CDâ€™s, money markets or even bond investments. Over the past couple years these type investments have yielded a paltry 3% to 6% pretax rates. We can pay private real estate money lenders 9% to 15% on their money. So it is easy to see why they will be interested in investing in your real estate investments to get that kind of return on their money.
Private real estate money lenders will want to know several things about a property before they will invest. The questions most private real estate money lenders are going to want to know about your investment include:
1. What is the purchase price?
2. How much is the property worth once fixed up and rehabilitated?
3. What will the rehabilitation cost be?
4. How much do you want to borrow?
5. What is your exit strategy i.e. do plan to flip to a first time buyer or hold to rent?
6. When will you pay off the private investor
You may want to have a short little presentation book or business plan laid out in a professional looking format to present to a private lender that addresses these issues. This booklet will show you have a well thought out plan and help to establish credibility.
In this new era of real estate investing you need to look to new and different ways to financing your real estate interments and private real estate money will be key to your investing future.
The author has permitted the reprinting and redistribution of this article.