Financing your deals

[John Hamrin]

I was listening to a BP podcast and the speaker (I think his name was Charles) was saying that if you want to be a good investor you should spend more time learning/figuring out the financing for the property over the property itself. I’m inclined to agree. What resources are out there to really learn what goes into the underwriting of financing? How do you determine if you’re getting good terms on your financing? About me: I am an aspiring real estate investor that would like to focus on fix and flips and long term buy and hold Multifamily properties. I work in construction doing residential remodeling. My goal is to use my knowledge to save money on my labor costs for the fix and flip strategy and then take the profits to fund more flips and or purchase multifamilies. Any advice on financing resources would be greatly appreciated. Thanks

[Israel Torres]

Hi John, one of the key things in most deals is knowing your options to financing.  Through friends that have invested, bigger pockets, reading, and blogs I have learned that there are many different ways to finance deals.  I have done land contracts, traditional bank loans, hard money, etc...I always want to start with knowing the seller.  I don't want to go through a real estate person, I want to go direct.  When I see a for sale by owner or I see a building that interests me, I simply knock on the door and ask to speak with the owner.  If the owner is not there I will look it up on the tax assessors website and will stop by their home or mail them and mention of my interest in their property.  You'll get some weird looks at first but once I have the owner in front of me or on the phone that is when the deal begins to unfold.  Knowing where the owner is coming from allows me to pivot when needed or understand their true number and what financing options exist with them.  From that conversation you have enough information to know where you can negotiate and where you cant. Then you see what options exist with either the owner in a seller financed, mortgage, or a hard money lender or some other kind of way that exists.   I usually work through all of those solutions creating financial models of each with me choosing one that best meets my strategy long term.  I hope this helps.  Saw you were in Chicago as well.  If you ever want to run a few things by me feel free.