How do you decide which financing option fits a deal?

Question

When evaluating a deal, what factors help you decide between different financing options?

Timeline? Risk? Exit strategy?

Interested to hear how others approach this.

David Krulac · Answer

A high percentage of properties that we bought came from the government, sheriff sales, tax sales and foreclosures. The first property I bought was from the state highway department handled through the attorney general's office. Seller financing was not an option. Another source of properties were probates, estate and life estates. Seller financing is difficult in though purchases. The second property I bought was an unlisted multi-unit owned by an estate with five heirs and we bought for less than 50% of the apprised value for inheritance tax. The property was about 68 years old and needed a lot of work that none of the heirs were interested in doing or owning the property. They wanted the cash. We have bought some foreclosures where the lender did finance the properties to us at 90% LTV at market rates. Which was a good deal as we were buying as investors and getting financing that was like owner occupant, all legal of course. The third property we bought was from a relocation company and no seller financing was available, again they wanted the money. But the fourth property was a rental property owned by a broker who needed money for his brokerage business and he seller financed at an interest rate 6% LOWER than market rates.

Nick Belsky · Answer

@Brandon Lee

Prime example of when working with a mortgage broker whom specializes in investments is extremely recommended. We have access to dozens if not scores of lenders, all with different programs for different scenarios to help clients achieve their goals. If clients are way off base in their expectations, we can help bring them back on track. Vice-versa, if there is room to be more aggressive, we can guide that way as well.

Cheers!

How do you decide which financing option fits a deal?

How do you decide which financing option fits a deal?

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