Where did you get money to buy Foreclosures?

Question

Did you have to spend money out of your pocket to purchase foreclosures? If so, how did you come up with the money?

Account Closed · Answer

HELOC, flips, savings, private lenders and equity partners.

Jon Klaus · Answer

Day job and private money loans.

Dawn Anastasi · Answer

Me three!

Chris Martin · Answer

A technicality, but an important one. To answer Antonio' question, buying a foreclosure is different than most real estate transactions. The trustee holding the sale will require cash at the time of sale in many states, and shortly (within days) after the sale in most others. Silvio's answer covers non-foreclosures (REOs, short sales, etc.), which are quite different than trustee sales held at the courthouse.

Antonio Bodley · Answer

Shari Peterson I prefer this method much better. I'd much rather have earnest money coming out of proceeds than me having to put out the EMD upfront out of my own pocket. Now if I can find a title company who will participate in this type of transaction I should be in the clear. One more thing. I noticed I only find transactional funding companies online. How can I find the transactional funding business in my local area? It's not like I can look up this kind of business in the phone book and go to this company where ever it is.

Shari Peterson · Answer

Antonio Bodley, yes I believe many investors do it this way. But, you'll need to discuss this with your title company. Can we hear from other investors who regularly do this and how they make sure that the check is held and not cashed?

Nate Garrett · Answer

Indeed. Over time you will find it easier to find capital partners (banks, investors, partners) with lower interest costs. But initially, you will probably have to pay your dues so choose your first few projects carefully as hard money loans increase the risk of a project from the outset. As you build a track record others will come into your circle that will help you. Establish a trust relationship with a local banker as soon as possible.

Antonio Bodley · Answer

@Shari I am aware of transactional funding not covering earnest money. I was talking about coming up with earnest money out of my pocket.  You say checks can be written and left uncashed in escrow. You mean  the checks can be written for the amount of EMD  then when the deal closes the proceeds will cover the EMD?

Shari Peterson · Answer

I can't speak for other transactional funders, but we do not provide loans for the earnest money deposit. Depending on who you are making your offer to, many investors have success at providing a check for the EMD that is held in escrow but never actually cashed, and the transactional funds come through to cover the closing purchase price and cost. That is one way around this obstacle.

Antonio Bodley · Answer

Shari Peterson Now I see what you mean by less expensive. I noticed you are a transactional lender.  Have you ever loaned money to investors who wanted to purchase foreclosures? The only thing I need to be concerned with is coming up with that high earnest money deposit.

Where did you get money to buy Foreclosures?

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