I've read several times about the idea of a real estate funnel: generate hundreds of leads, analyze a subset of those, make offers on a subset of those, and have a subset of those accepted. That makes total sense to me. I do have two questions about it, though:
1. What if multiple offers are accepted, but I can only afford one? What contingencies can I put in the offers to avoid getting stuck in this case? I suppose an easy alternative is to only make one offer at a time, but let's assume I didn't do that.
2. At what stage do I approach people (banks, individuals, whomever), for financing? Before I make an offer? After an offer is accepted? If I'm working with a bank, I can get pre-approved well in advance, but what if I intend to work with a private lender?
1. If multiple are accepted and you cannot pick them all up, you can choose which opportunity you wish to proceed with. If this is the case, I would suggest lowering you offers next time around. You don't need to put any contingencies, you just back out of your offer before the closing date.
2. Depending on the financing you are obtaining and the relationships you have with these people will decide when to speak with them about financing, usually it will be when you have the property under contract. I search for bank financing once under contract with the property, usually the bank will want this.
Let me know if I can help you further!
1. Assuming you are offering on properties that are "Good deals", you have yourself a wonderful problem. It's like having too much money. My first thought is that you could wholesale the property you did not want and hopefully make a small spread. If the wholesaling idea does not work out, you will likely have contingencies on each deal. If you know which property you want, you can have a contingency that says, "this deal is contingent on your first deal NOT getting accepted." Or just have the typical inspection and financing contingency in there. You'll likely be able to find something wrong with the property where you will be able to back out.
2. Financing comes first. Figure out what you can afford so your agent knows that to send you. A pre-approval letter is very powerful when putting an offer down. Some sellers won't even accept your offer without a pre-approval letter. If you intend to work with a private lender instead, that's fine. Tell your conventional lender that you have chosen to go a different direction. You aren't obligated to a lender until you sign the final docs.
Hope this helps!
Thanks for the feedback, guys. Very helpful.
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