EQUITY FUNDING
Many start-out investors must rely on their current fix-up job profits in order to acquire their next project. This is very common! Borrowing for a down payment or to payoff rehab debt makes good sense. What don’t make good sense and often happens — Investors will borrow the maximum amount they can. All the funds don’t get used for business — But even worse, the payment on the new borrowing turns the property into an alligator. That’s very bad, don’t do it!
For fix-up investors, newly created equity (after fix-up) is a prime source for quick cash. Every investor I’ve ever met needs cash. House fixers are well aware that fixin’ houses for yourself don’t provide a paycheck on Friday night like traditional W-2 jobs. Quite often, house fix-up investors must rely on their newly created equity for grocery store money.
After fix-up – it’s fairly easy to obtain a new loan or another loan to pullout all your cash, which includes the down payment and fix-up funds. In the strict sense – borrowing has little to do with profit-making. It has more to do with increasing your debt. However, it facilitates your forward movement to make profits! Without cash you cannot move forward; therefore, your investing would be stopped. Also, your overloaded credit cards will likely need relief.
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This is very Interesting and a very good way to get ahead
Jay i have a question. Once i fix up and create equity in one of my properties. Where can i get a loan against that money. Through a private lender or what? This is so i can reinvest in my next project
Obviously – borrowing depends on the property itself! Is it a average house (rental), etc.?
PRIVATE hard money lenders are usually quickest. ALSO, chattle mortgage folks, like BENEFICIAL FINANCE, are good source for 2nd mortgage money.
Depending on the type of properties you’re buying, sometimes you can create a note and mortgage on your existing property with equity – to use for down payment to purchase your next property (especially fix-up type)., say you design a note for $20,000, secured by your existing property. FIXER JAY