Friday, February 02, 2007

The Big One

As I stated in my last Blog, at some point you've got to deal with the Big One - Financing. Yep, it's a fact; you need money to do your deals(most of the time). I know, I know, how about no money down? Well, good luck. I've been doing Real Estate deals for 23 years and I never did a no money down deal. Maybe I'm just an idiot. But, I've always found you need money to do deals. Period. So where do you get money to do deals if you're doing your best to pay the cable bill? Actually, there are lots of sources. In fact, as you climb up your Investor career ladder, you'll often find there is more money available than you can find deals for. That's because deals are HARD to find and money is EASY to find. Believe it or not finding money becomes easier as you go along. Now, let's look at some of the ways that you can get money for your deals NOW!!! There are a plethora of finance sources you can tap today. How about your Bank to start with? You've been a good customer all along, so shouldn't they help you out? Wrong. Most cases, unless you're using a small town Bank they could care less about your loyalty to them. Everything they do for you is going to be based on numbers not the Apple pie you brought in last week to the loan officer. But, since you do have a history with your Bank, you might try getting a line of credit from them. Ask for as much as you can and settle for the lower amount. Most Investors buy properties using a line of credit. It's like instant cash. And, they negotiate for a better price because they can close with cash fast! If there is anyway you can get a line of credit, I suggest you get it today. Remember, you don't pay anything for it. The money could sit there month after month and you don't pay a dime. You only pay when you use the money. And then, you only pay interest on the amount you have borrowed. Some Banks ask you to bring your credit line back to zero at least once in a calendar year. If so, look for something else. You don't want to have to scramble to get the line paid back if your money is still tied up in a property that's about to sell for example. If this all sounds vaguely familiar, it probably is. That's because you've dealt with credit cards before. They work the same way as a line of credit. In fact, a lot of deals have been done using credit cards. They are simply a line of credit, albeit one with an extremely high interest rate. That alone makes me suggest you apply for a regular line of credit. Most of the time, by the way, these smaller lines are unsecured - meaning you don't have to put up any collateral in case of non-payment. This is good. Some Investors get multiple credit cards which can total up to 50 to 100 thousand dollars in borrowable money. Keep in mind that the return of profit on money you didn't even have to begin with is astronomical. You're literally making money out of nothing; nothing you had to begin with anyway.

Robin's Rule # 31: A Bank is always interested in me, as long as I pay the interest

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