Larry Goins shares different strategies to fund a deal if you don’t have personal funds available.
From assignments to crowdfunding to hard money, there’s various ways to secure money and it all depends on your needs for the particular deal.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host
Larry: Hey, this is Larry Goins, and welcome back to this week’s REI Classroom. I’m your host, and today we’re going to be talking about funding your deals when you have no money.
Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.
Larry: Now, the first thing I want to talk about is assignments. Assignments are the fastest, simplest, easiest way to be able to buy and sell a property without any money. In fact, with assignments, you’re not really selling houses. You are selling the paperwork. You’re selling the contract. Really, all you have to do whenever you’re buying the property and you get the property under contract in your name, you just put your name and the word “and/or assigns.” That’s all you really need to do.
Now, I will let you know this. Sometimes it can be difficult to do this with a listed property. You can’t assign a HUD house, and typically you cannot assign a listed property that’s on the MLS or a bank-owned type property. This is going to work with your individual properties that you’re buying from single owners, not properties listed on the MLS.
Now, the second thing you can do to be able to buy and sell a property without any money, funding a deal without any money, is using options. Options give you the right, but not the obligation to buy a property. That’s very, very important. Like I might give you $100 for the option to buy your property for $50,000 for the next 90 days. Now I have 90 days to sell your property. If I cannot get it sold, then my option simply expires, and I lose my $100.
If I do get the property sold for say $60,000, where I have a $10,000 spread, then all I need to do is exercise my option. Then, I buy it at $50,000 and I sell it at $60,000 at the same closing table, and I do what’s called a “simultaneous transaction.” We’ll talk about that on one of the next classes as well.
So some other things that you can do to fund your deals with no money is private money. Private money is anybody who has money and they’re not getting a good return on it. You can find them anywhere, friends, neighbors, relatives, anybody.
Another thing is self-directed retirement accounts. That’s very, very important. Look up trustees or custodians that do self-directed retirement accounts like Equity Trust, TrustETC.com, CamaPlan, CamaPlan.com, QuestIRA.com, KingdomTrust.com. You can look up these different custodians at the county recorder’s office and find out individual investors who have these accounts that are buying properties in that name. Because it’ll say something like, “Equity Trust FBO,” and then the buyer’s name or the owner’s name, and that’s the way they’re titled.
The next thing is unsecured business lines of credit. You can go to sites like Prosper.com, LendingClub.com, which are also known as like crowdfunding sites. Prosper.com, LendingClub.com, there’s a lot of them out there. You can even Google search crowdfunding or micro-lending sites as well. Also, hard money lenders are a great way to be able to fund your deals. A typical hard money lender, they’re loaning based on the asset, or it’s an asset-based loan, and not a credit-based loan, so it’s based on the property itself.
A couple more that I want to share with you is business partnerships. Find somebody who has money, you have the expertise, and you go out and do a deal together. They put up the money and you do all the work. Next is a cash partner, and you can either pay them an interest rate or a percentage of the deal. What about a credit partner? Somebody who has access to credit, whether it be a credit card or a line of credit, or a home equity line, and then you go out and do all the work.
So that’s a lot of different ways that you can use to fund a deal when you have no money. I’m Larry Goins, and thanks a lot for watching.
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