What is Real Estate

Writen by Paul Wells

Funding is a critical part of any business, whether it is a real estate investing business or some other type of business. In this article I describe some ways to fund your foreclosure investing deals.

A business won't last long without the funding it needs to stay afloat and to conduct business. In the business of creative real estate it's important to have that funding in place as quickly as possible and as accessible as possible.

Realize, though, that it will take time to find people so start now and remember it will take a track record to get your private money. That being said if you find the right deal you can find the money. The right deal would be 70% Loan-To-Value after repairs. There are many strategies to secure the funding you need to lock in good deals like that.

When I first began as a real estate investor I neglected the importance of having funding in place so I could pull the trigger on deals as they came up. Where was I going to find the money to fund the deals I would always ask myself? I saw many other investors doing deals and having the funding in place.

I went through the basic avenues of where to get money. Where is the one place that everyone thinks they can get money? A bank, right?

I came to find out that is the wrong answer. What is the preoccupation with banks in this country? I can only figure that is the way people have been trained. My thought is that there must be a reason why many of the tallest buildings in any given town have the name of banks on them. I don't want to fund those buildings or those names on them.

In my entire career as a full-time real estate investor I have never used a bank to fund any of my deals. There are other ways you can fund your deals besides a bank.

If your house has enough equity you can take out a home equity loan where you write yourself a check against the equity in your house. You can also open a line of credit on your house. You can create partnerships with other investors where you can share a percentage of the profits.

When I first started in this business my first investor would write the checks for any amount I asked him for--however, he charged outrageous fees. For example, if I borrowed $100,000 and we made $30,000 on a deal, my investor got his $100,000 plus 12% while the deal was in process, as well as half the profits at the back end. In the long term, we would split the profit and the investor would get half the profits, plus 12%. It was very, very high, but you know, I needed the money and I wanted to get my business started and I was willing to do it. Over time I learned that that was very expensive money so I began looking for other ways to fund my business.

One of the first ways you can fund your business is to look for creative funding or financing techniques with the sellers of the properties. A lot of times sellers that are motivated to sell their homes will do just about anything to make a deal happen because they want out of the house. As my business began to grow and the activity began to grow, I knew that the number one activity in my business was to find funding, particularly private money.

Paul Wells has been investing in foreclosures full-time for more than 5 years. For more foreclosure investing secrets like the one in this article, subscribe to Paul's Free Foreclosure Investing course here: http://www.FreeForeclosureInvesting.com