How Do You Handle an Opportunity When Your Capital Is Tied Up?

Question

Curious how investors approach this situation:

You have an existing investment that hasn't reached its exit yet, but another property comes along that you'd seriously consider buying.

Do you generally wait, negotiate a longer timeline, look for another capital source, or walk away?

Tracy Thielman · Answer

Absolutely. Having multiple capital sources can make a huge difference when an investor’s funds are tied up in another project. I’d definitely be open to connecting and seeing how our funding options could complement each other and help investors cover the full capital stack. Let’s stay connected!

Nicholas Floyd · Answer

Tracy, I agree with your point about having multiple capital sources available. I work with investors who have strong opportunities but need additional liquidity because their capital is tied up in another project.

Through my business funding company, I help clients access business lines of credit, 0% APR business credit cards, and business loans that can complement their property financing. Having those options in place can help cover rehab, carrying costs, or preserve cash for the next opportunity.

I’d be interested in learning more about the financing you offer as well. There may be opportunities for us to complement each other and help investors who need both property financing and additional business capital. I’d be glad to stay connected and explore how we could be a resource for each other.

Chris Seveney · Answer

All of the above. One thing I do not do is lie to the seller and try and hide the fact I cannot close right now. Be completely upfront with them and typically they will be willing to work with you

Nicholas Floyd · Answer

@Tracy Thielman for slme reason I'm not able to find you the seech to send you a message, can you shoot me one

Henry Clark · Answer

OP we all have different risk tolerances, all at different points of scaling.   Here are some approaches depending:

1.Cross collateralize with the same lender using equity in your current deal.

2. Cash out your 401k- I actually did this. You’re taking a 50% tax haircut.   Thus the new deal needs to be 100% COC or higher.  Ours was 400%.  I would only do this if you are an experienced investor.   Not starting out.

3.If you’re dealing with a bank, use any Money markets, CDS, etc and move to that bank.  Use for collateral.  They will be able to lock access down.  This will get you higher lending limit, better interest and terms since it is cash equivalent assets.

The new deal has to be a great deal.   Otherwise would not use the above.

Nicholas Floyd · Answer

@Tracy Thielman sounds like a plan to me, I'm about to shoot you a message

Kerry Noble Jr · Answer

Definitely try to have other sources of capital on hand before you tie up your money

Tracy Thielman · Answer

I currently have issues with my inbox. But you can try calling me at 704-991-5299

Tracy Thielman · Answer

Great points. I especially agree that the new deal needs to be strong enough to justify taking on additional leverage or using other capital sources. Cross-collateralization and leveraging existing assets can be powerful strategies when the numbers make sense. Appreciate you sharing your experience!

Tracy Thielman · Answer

I agree. Transparency with the seller can go a long way. Being upfront about the situation can often open the door to solutions you may not have considered. Great perspective!

How Do You Handle an Opportunity When Your Capital Is Tied Up?

How Do You Handle an Opportunity When Your Capital Is Tied Up?

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