In this episode, I continue my month long All-Star Q&A Series. All month, I am asking some of the most incredible real estate investors that I have interviewed over the past seven months questions that I commonly get from new real estate investors. This is an incredibly powerful series and I am really excited to bring it to you. We are continuing the series with the following question: what is the best strategy for securing funding?
Sharon is an amazing wholesaler and her answer to this week’s question is mind-blowing!
Sharon believes that securing funding depends primarily upon whether you still have a job outside of real estate or not, and she strongly recommends that you keep your job for as long as you can. Lenders have strict requirements, and, unless you’ve been in the business for a while, you absolutely need to have a W-2 income to get a loan. Sharon divides cash buyers into two categories: those with actual cash or access to cash, and those that have a job and use an investor-friendly bank.
Here are Sharon’s six suggestions from new real estate investors on how to fund deals:
- Investor-friendly banks: These won’t be big institutions, but the smaller, local banks. Ask around your network for suggestions. Sharon says it’s important to know what the requirements are before you need a loan.
- Home Equity Lines of Credit: If you have a lot of equity in other properties, you can tap into this source of cash when you buy a new property.
- Private Money: Sharon’s advice is to not pre-qualify people when you’re trying to find a source of cash. Let everyone you meet know what you do and that you’re interested in partnering with people; memorize an “elevator speech.”
- Roth IRA: Use your Roth RIA for the downpayment for a property or even for the full purchase price. The money you make will go back into your Roth RIA tax-free.
- Hard Money: Sharon thinks of this as a last resort, but if it’s the only way you can make a great deal, use it.
- Find a partner: You can split the deal will someone who has money but doesn’t have the skills or time to make the deal.
I am thrilled that Sharon shared these ideas with the listeners of Just Start Real Estate! Her advice is very practical and includes things you don’t always hear from experts in the industry.
You can find Sharon here: