How to Get 100 Percent Financing

How to Get 100 Percent Financing

How to Get 100 Percent FinancingIf you are a real estate investor Omaha, involved in new construction or fix and flips, it is important to know how to get 100 percent financing. Obviously, one way is if you have a private investor or hard money lender who loans all the money; for the purchase and for the improvements. It allows you to have none of your money in the deal. Just make sure the loan to value is really good.

What if you don’t have the hard money lender who funds everything? The second way is through some kind of bank financing. You can’t get 100% financing from a bank. 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%?

Here’s where you need to have private money investors who have smaller amounts of money to invest than the hard money lenders who can fund the whole project. Private money is similar to hard money in many respects, but here you have an individual looking to achieve higher returns on their cash. Oftentimes, there is a close relationship with a private money investor ahead of time, and these investors are often much less “business” oriented than hard money lenders. Additionally, private money usually has fewer fees and points, and the term length can be negotiated more easily to serve the best interest of both parties.

Private investors will lend you cash to buy property in exchange for a specific interest rate. Their investment is secured by a promissory note or second mortgage on the property. The interest rate given to a private lender is usually established up front and the money is lent for a specified period of time, anywhere from six months to thirty years.

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 yourself is to buy properties with a really 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 can pay the private investors really well typically 8% to 12%, depending on the amount of money they lend.

One source of funds for the 20% are IRA 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.

We are a rapidly growing company and see the opportunities in Omaha. We are seeking hard money-lenders to provide short-term financing for periods usually less than one year. We offer hard money lenders flexible terms and the returns are higher than typical banks offer for savings. If you would like specifics about projected returns to hard money lenders, please call us to discuss the kinds of deals we offer.

Styl Properties, Inc. 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 402.909.0608 to let us know what YOU need help with!

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