100 Percent Financing
One problem for real estate investors with limited cash resources: How do you get 100 percent financing on new construction or fix and flips in Cedar Rapids? Obviously, one way is if you have a private investor who loans all the money; for the purchase and the improvements. It allows you to have none of your money in the deal. However, you need to make sure the loan to value is really good.
What if you don’t have the private investor who funds everything? The second way is through a hard money lender or some bank financing. You can’t get 100 percent financing. Typically, they will only fund 80%. They want you the borrower to have some skin in the game. If you don’t have the 20% how can you proceed? How do you get the remaining 20%?
How to Get 100 Percent Financing
Here’s where you need to have private investors who have smaller amounts of money to invest than the private investors who can fund the whole project. The second group of private investors may be looking for a return on their money that is better than the banks. Realize that the hard money lender who loans 80% is in the 1st lien position. Your private investor would be in a secondary position. It is important that the private investor knows he is in the secondary position and has more risk than the bank lender or hard money lender. In the event of a default or you get hit by a bus, the 1st lien investor gets paid off first, and then the secondary lien investor.
One secret to lowering the risk for your investors and you are to buy properties with a good loan to value position with plenty of equity in the deal. By doing so, you can assure that both parties get paid. The risk is higher for the private investors, so you pay the private investors well, typically 8% to 12%, depending on the amount of money they lend.
IRA and 401k investors
One source of funds for the 20% are IRA and 401k investors who want to participate in real estate, but don’t have large reserves to invest. They may only have $20,000 or $50,000, and that’s not enough to do the whole deal.
How to get 100 percent financing is easy if you have a list of investors who can fund your projects and don’t mind being in the secondary position. If you do your job of delivering high-quality projects with a great loan to value, leaving your investors with plenty of margin for error, they will gladly loan you money for returns of 8% to 12%.
We are seeking private investors who are searching for returns that better the ordinary returns of treasuries, banks, and savings accounts.
Harmony Property Solutions, LLC is here to help homeowners out of any distressed situation.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple, truth about your home and how we pay cash for houses Cedar Rapids.
Harmony Property Solutions, LLC is part of a nationwide group of thousands of investors who are helping tens of thousands of homeowners every year.
We may not be the “traditional” route, but we CAN help, and we can do it quickly!
Give us a call today at 319-343-6773 to let us know how we can help YOU.