A lack of real estate financing is perhaps one of the biggest obstacles confronting new investors. However, some investors are not aware of the multitude of real estate financing options made available to them. Essentially, finding real estate financing to close deals is as easy as knowing where to look. In reality, there are often multiple financing options available to those who are willing to put in the work. You don’t need to rely on lender financing or a local private money lender if you are looking for money.Your network may already have somebody willing to finance you next deal, but you will never know without asking.
Alternative Real Estate Financing Options
A lot of people want to invest in real estate, but don’t know where to start. If you Know how to to find and close a deal, there are many people who have the money. How many people in your contact base know that you invest in real estate? You don’t need to sell everyone you meet, but people should know that you are in the business. If you start your real estate financing search with the people that are closest to you, there will be at least a few people who will show an interest or want to meet with you to discuss working together. Instead of shying away from your friends and family, they should be the first place you look. Outside of a first-time homebuyer loan, they may be the easiest real estate financing option available.
Social media has made it easier than ever to market your brand, and whatever you may need. Even if you don’t have all the answers or know exactly how you are going to invest, it shouldn’t stop you from making posts. Start with a few blog posts or a link to your business website. Consistency is the key to attracting people to work with you, regardless of how close the people may be. In addition to social media, you can send a personal email or even an old fashioned letter. The point is to let your friends, family, co-workers, parents and everyone you come in contact with know that you invest in real estate. This has to be your starting point if you are looking for financing.
Networking groups and real estate investment clubs may not be your thing, but they are essential for learning how to start your own business and for finding alternative real estate financing options that could be of use. Regardless of the business you are in, people like to work with others that they feel comfortable with. The more you show up and participate at these meetings, the more people will know about you and ultimately the more they will want to work with you. Even if they don’t have a pressing need, you never know who they know and who they can refer to you. If you talk to a fellow investor at a meeting and tell them that you are looking for financing help, they may suggest you speak with someone they have worked with before. Referrals are a huge part of the real estate business and essential if you have a specific need. These meetings are filled with people that can indirectly or directly lead you to financing real estate deals in the future.
Think of the people that you worked with on your last deal. Between your mortgage broker, realtor and attorney, you can bet that one of these people knows someone that they have worked with in the past. Additionally, even if you did not work with a specific private money lender for a while, you never know what they can do for you on a deal to deal basis. It is entirely possible that with the right financing, first-time homebuyers could make very competitive offers.
If you are looking for real estate financing as a first-time homebuyer, in addition to people you come in contact with, there are numerous ways to go about your search. First, there are many real estate websites (Craigslist, Trulia,etc.) that have property listings for sale or for rent. Spend an hour a week looking at those listings that either have rental properties available or investors who are looking to buy. It will probably take a few emails, but if you are consistent in your follow up and are clear with what you are looking to do, you will get a response. From there, you need to have a plan in place for how you are going to find deals and what you need the financing for. In addition to specific real estate websites, you probably also drive by prospective financing every time you are in the car. Every bandit sign you see needs to be called and followed up with. If you are dedicated to putting in the time and staying consistent, you should be able to find multiple financing options.
Finally, you can always look for people to call you. You don’t always need to be reaching out. By using the same methods you did to find real estate financing – but in reverse – you can get your phone to ring. Bandit signs saying or posts looking for investors can generate leads – just give them a chance. Many of the calls or emails will be from skeptical people, but the ones who have a genuine interest will be the people you can consider financing real estate from. Even if you don’t have a pressing need for financing, you should always look to build your financing pool. The more options you have, the better chance you can close quickly. Not being approved for lender financing is no excuse not to close deals; you have many more real estate financing options than you may have thought.