Why You Need to Fill Your Money Buckets
Categories: Blog Posts
Why You Need to Fill Your Money Buckets
Always Be Ready
One of our main goals at The Cash Flow Company is to help investors succeed! Top real estate investors have a secret formula. First, they’re always looking for properties. Second, they’re always ready to buy those properties because they have their money buckets filled. Therefore, when opportunity knocks, they are prepared to answer. How can you fill your money buckets? Let’s take a closer look!
What Are Money Buckets?
Besides searching for properties, the second key to success is having the money ready to buy properties quickly. This brings us to the concept of a “funding stack” or “money buckets”. Top investors have multiple funding options lined up so they can act fast when a deal comes along. Let’s explore the six types of money buckets!
1. Other People’s Money (OPM)
Why Use OPM?
First and foremost, Other People’s Money (OPM) is a powerful tool. To clarify, OPM means borrowing money from friends, family, or other investors. Consequently, they lend you money because they trust you and want a better return on their investment.
Example:
If you need $20,000 for a down payment, OPM can help you get it without a credit check or income proof.
Benefits:
- No credit checks
- No income checks
- Flexible terms
2. Home Equity Lines of Credit (HELOC)
Why Use HELOC?
Another incredibly helpful tool is a HELOC. A HELOC allows you to borrow against the equity in your home or rental property. It’s like having a credit card linked to your property.
Example:
For example, Jane in North Carolina has a paid-off property. She can then get a HELOC to buy fix-and-flip properties. Moreover, she uses a debit card that is linked to her HELOC for purchases at Home Depot.
Benefits:
- Access funds anytime
- No need for repeated applications
- Fast and easy to use
3. Business Credit Cards
Why Use Business Credit Cards?
Business credit cards don’t affect your personal credit score. They are useful for short-term needs like repairs, as well as for small purchases.
Example:
If you need to buy materials for a renovation, use a business credit card instead of a personal credit card. As a result, your personal credit score remains intact and separate from your business expenses.
Benefits:
- Doesn’t report to personal credit
- Flexible for small expenses
- Easy to obtain
4. Hard Money Lenders
Why Use Hard Money Lenders?
Hard money lenders are flexible and don’t focus on your credit score. Instead, they can provide funds quickly for flips, as well as rentals.
Example:
If you find a great flip but need the money in a few days, a hard money lender can provide it faster than a bank.
Benefits:
- Fast approval and funding
- Flexible terms
- Suitable for flips and rentals
5. Private Lenders
Why Use Private Lenders?
Private lenders are like a middle ground between banks and hard money lenders. They not only offer better rates than hard money lenders, but they also require less paperwork than banks.
Example:
Private lenders can give you 90% of the purchase price and 100% of the rehab costs. Consequently, this helps you get started on your project without waiting for bank approvals.
Benefits:
- Less paperwork
- Competitive rates
- Covers most of the purchase and rehab costs
6. Local Banks
Why Use Local Banks?
Local banks offer lines of credit or loans with lower rates. They may take longer to process, but they are ideal for long-term investments.
Example:
If you’re planning a pop-top renovation, a local bank can provide the necessary funds at a lower rate.
Benefits:
- Lower interest rates
- Ideal for long-term projects
- Personalized service
Be Ready for Every Opportunity
In conclusion, by filling your money buckets now it ensures that you’re always ready to seize opportunities in real estate. By having diverse funding sources, you can act fast and get the best deals. Start building your money buckets today, and watch your investment opportunities grow. For more tips and tools, visit The Cash Flow Company. You’ll find tools like our Deal Analyzer and a comprehensive guide to building your funding stack.
Watch our most recent video to find out more about: Why You Need to Fill Your Money Buckets