If you’ve ever heard of wholesaling in real estate, you’ve probably heard that it’s a quick way to make good money. Essentially, you serve as the middleman between a buyer and seller; buying from one and selling to the other.
But how will you finance such a deal? Well, getting funding for a wholesale real estate deal can be tricky, and some financing options are better than others. Let’s look at what options are out there!
Funding With Your Own Cash
Of course, you can use your own money to make a deal like this happen, but most investors shy away from this option because they can’t afford it.
And even if you can afford to make a deal happen, you probably won’t be able to do a few deals simultaneously—something wholesalers who use others’ funds can do.
That said, if you do use your own money, you won’t have to worry about lender requirements or interest payments.
Transactional funding is a financing solution that’s tailored to wholesale real estate investors. Essentially, you get the money for a few days, and the expectation is you’ll close the deal soon after the funds are released.
Remember, in a wholesale real estate double closing, you buy the property from the seller and then sell it to the buyer at a higher price.
What’s the main benefit of using transactional funding? With this, you’ll be able to close more deals on your own, and it’s an especially attractive options for new investors with limited capital.
And since this short-term loan will be secured by the property in question, you won’t need a credit check or down payment.
However, getting transactional funding can be expensive, and the repayment timeframe is always strict.
Basically, transactional funding is best when you know you’ve got a buyer all lined up and ready to close; this way there’s no waiting.
Hard Money Loans
Hard money loans are also popular among professionals who do wholesale real estate investing. One of these loans will be backed by the property’s value, and the borrower’s creditworthiness isn’t important.
Usually, you can get approved quick, and the terms tend to be flexible. But you will have to deal with a higher interest rate and a shorter repayment period.
Again, these are best when you have a deal all lined up. If you can’t get the property off your hands in time, you’ll probably have to pay a penalty.
If you have excellent credit, a lot of assets, and good income, you may qualify for a conventional loan from a bank or mortgage lender.
The downside with these is you won’t be able to move fast. You’ll have to get an appraisal and an inspection, and you may have to fix up the property before you can secure the mortgage.
Private Money Lenders
If you know someone with deep pockets, you can close a deal with their help. Speak with friends, family, or professionals who know a thing or two about real estate investments.
Sure, these are harder to get, but they usually come with flexible terms and a low rate of interest.
Going in with a partner can also be a way to big profits in wholesale real estate investing. Just ensure all the terms are well documented in a contract.
It goes without saying, but if you go in with a partner, you’ll probably have to split the profits 50-50. Of course, if you did more work than they did, you have a good reason to expect a higher percentage.
Need Quick Funds To Do A Real Estate Deal?
At DoubleClose.com, we’re proud to offer the best transactional funding, and we’ve helped so many wholesalers close profitable deals.
Secure the cash you need to achieve your investing goals. Whether you need over or under $1 million, we’ve got you covered. Our straightforward process will have you on the fast track to closing in no time.