What is the best way to use leverage when financing your deals?
I've been hearing a lot about leverage and OPM to purchase real estate property. What is the best method or methods to use outside of bank loans and credit?
Also where would these methods be found to research?
Fannie Mae mortgages are best for Single Family if you can get them (you need income and good credit). Hard money is great also, but you need to have the income and credit to refinance (if you are buying to hold for rental) - but if you are flipping, you just need to know you have a good deal and the ability to rehab and sell it quickly. With private money, you can be as flexible as your lenders (and state law) will allow you to be.
Start networking with your nearest REIA to learn how others are doing it and who the hard money lenders are in you area. Work to improve your income and credit if necessary. Both are powerful tools to accelerate your investing.
Find partners/investors.
Offer between 50-75% shares of the partnership on holds. I would offer 50/50 when it is a really good deal. You become acquisition/asset manager while your partner/investor sit back, relax a collect every month. You should be providing them detailed statements every month on cash flow and progress if any.
Or you can offer a fixed interest rate for a private loan and tell the title company to put a lein/deed of trust or whatever would be used in that state as security to the private lender.
Most importantly is how you present the deal to the investor. Lots of DD required.
Hope this helps
Brilliant,
Thanks Doug McLeod and Hai Loc for the valuable information. This definitely provides some great ideas to start moving forward with future projects.
To success,
Jeff Mitchell