As soon as you have discovered a number of companies or folks that will work well with your goals, you can start to become a little more innovative when it comes to financing your deals. Creativity involves whatever you can legitimately conjure up in terms of combining one or more of the above financing techniques and resources in order to maximize your borrowing power.
Allow's state you wish to fund a bargain at ONE HUNDRED % consisting of the investment cost and closing costs, the renovation expenses and also the holding prices. So exactly what do you do? Well, you combine two (or more) of the above approaches. If a bank will lend you 75 % of all of your costs, then you use another approach, such as a home equity line of credit (from a different property), a private money companion, or a retirement plan, etc., to fill the gap of the remaining 25 %.
What if you discover an outstanding deal that you must close within 24 hours or less? In this case, you consider calling one of your Hard Money Lenders who you have already established a relationship with. The HML loans you the 65 % of what you need. Again, you fill the 45 % gap with one of the others.
And in this case you might also consider applying for bank financing after you've settled on the deal. This is something that you will have to weigh out in regards to how long you will need the money vs. closing expenses, etc. Remember though, just because you obtain hard money in the beginning, it doesn't mean that is the loan you should stick to up until the project is complete. Provided you have possibly paid a large price in indicate obtain that money, yet ideally you have enough back-end profit in your deal that these figures were calculated from the very beginning.
Real Estate investors need to remember that creative financing often includes utilizing a combination of different financing methods. Protect yourself by having a complete understanding of all the terms of each of your loans before borrowing any money from any type of source. Note any and all upfront prices, reoccuring expenses, feasible repayment deferment alternatives, other financing terms, any type of pre-payments charges, any kind of pre-payment rebates, and so on and so on etc
