Tag Archive for: private lenders

Why You Need to Find Other Money Sources Now

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Why You Need to Find Other Money Sources Now

Banks are experiencing a significant decrease of money flowing into the lending pool. This has created a bank collapse that is greatly impacting real estate investors today. As a result, banks are forced to swim upstream in search of the “best of the best clients”, thus leaving investors to find other money sources. What can real estate investors do? We are here to help navigate you through these rough waters.

Private Lenders

A waterfall effect occurs when banks are focused on the “best of the best” clients. Thus, forcing investors to cascade down to private lenders in order to keep their business afloat. The influx of new clients has led private lenders to begin swimming upstream alongside banks in search of new borrowers. These borrowers are more experienced, have more money, and more liquidity. Unfortunately, this is making it harder for many investors to qualify for loans.

Other People’s Money 

In addition to private lending, another funding source is “other people’s money” aka OPM. These are individuals that are within our community and can lend $10,000 to $100,000. By knowing who to ask and where to look, you can easily ride the wave to success. So dive in and discover additional lending options and how to succeed during this bank collapse.

What you need to succeed

Investors can prepare for this lending squeeze by making sure they have cash, high credit scores, and are keeping up on projects. By getting into a deal now and holding it for 2-3 years, it can set you up for success in the near future. We can help guide you through the process of starting your business, increasing your credit scores, finding ways to improve your income, and helping with OPM options.

Need more help navigating these rough waters watch our most recent video!

 

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What is Gap Funding?

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Gap funding

In the real estate investment world… What is gap funding?

You should never count on a bank or hard money lender to give you a loan that will cover 100% of your real estate investment property.

What you should be able to someday count on, though, is funding up to 100%.

So, what is this type of funding?

Definition: What Is Gap Lending?

Gap funding is the money you bring in from another source to fill any gap left between the lender and the project costs.

If a lender offers you 70% of the LTV on a property, this type funding is how you fill in the remaining 30%. Usually, you secure gap funding, although unsecured funding is possible.

A “secured” loan means that the debt is backed by a piece of collateral. In a typical gap funding scenario, the loan is secured by the property being purchased.

For the most part, you won’t be able to find a gap lender at an institution like you can a bank lender. Instead, gap lenders are family members, friends, or someone you know.

OPM vs Gap Funding

You can use a couple funding terms interchangeably:

  • gap funding
  • gap lending
  • OPM (other people’s money)
  • real people’s money

All of these terms get at the same concept. It’s money, not from you and not from an institutional lender, that covers whatever costs of an investment property that your lender won’t fund.

OPM can cover up to 100% of a deal, but for now, we’ll be talking about it in a strictly 100% funding sense. These are loans that fill in the holes of a project that a mortgage or hard money loan wouldn’t cover.

Check out our Youtube channel for more great information.

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