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Not long ago I was having an in-depth conversation with one of my friends on the topic of Real Estate Investing. You see, my friend is a real estate investor who thinks like a real estate investor. His claim was that he liked to make money by using other people’s money (OPM). I can’t fault him for that. That’s how banks, insurance companies, and other financial institutions make money. So, why not use this concept for personal gains?
Reality is that during today’s lending climate the chances of getting that desirable 100% financing are rare, if any. That is, of course, when it comes to mortgages. Mortgages are secured by residential or commercial property. The smart underwriters assessing the loan risk know that we’re still in a deflationary stage. That’s why they want to cover their backs. They want to see some serious “skin in the game” from the borrower. So, credit worthiness and deal projection are certainly not sufficient anymore to justify any lender in its right mind to take on 100% of the risk.
At the same time, I know there are a lot of you out there who have found the “golden opportunity” yet lack the funding. So, I’m sharing with you the experience of one of my clients who was referred to me by my favorite realtor. If this may apply to you or a client of yours…great, just send me an e-mail. If not, just keep it in your “knowledge tool box” and use it when and if the opportunity may come your way.
My client wants to buy what he considers an incredible deal. For him the deal is the sum of multiple distressed residential property. He wants to buy them, do some cosmetic work, and re-sale for a profit. He also happens to be in an area where there is now competition for nice properties from potential owner occupant buyers.
So, let’s see what his options are...
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