EP 30: What Comes First: the Money or the Deal?

I consider this to be one of the more interesting and polarizing topics in real estate investing. I have interviewed extremely successful real estate investors who have completely different opinions on whether or not you should secure funding for your real estate deals first or try to find a deal first and worry about the money once you’ve found one. I could for argue both sides of this:

Pros of securing money first

  1. You have the money available to buy a property once you find it.
  2. Because you have funding, you should never have to back out of a deal.
  3. You can react very quickly to a good opportunity.
  4. You look like a much more credible buyer when you have “proof of funds.”

Pros of getting a property under contract first

  1. You can get into the game immediately.
  2. You can be successful without ever securing financing.
  3. Your profitable deals will attract money.
  4. You can build your business while securing funding.

The decision is completely yours. I have always advised people to secure financing before making offers; that is strictly so that you never have to back out of the deal. Having financing in place before you make offers will also give you the most exit strategies. If you have the financing in place ahead of time, you can wholesale, flip, or hold the property. If you do not have the financing in place, your best and only real option is to wholesale the property.

About the author, Mike

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