You’ve found the perfect distressed house to invest in. The owner wants to sell it to you for low enough that after you put the estimated cost of repair in it, there’s plenty of room for profit. What do you do now?
a) Shop for funding.
b) Start a bidding war between lenders.
c) Start demo, the house is as good as yours!
d) Put the property under contract.
It might seem ridiculous when you look at it in multiple choice, but the problem is less than silly because people the wrong choice every day. In fact, this misunderstanding is so common that we have to talk about it again. (Yes, we’ve talked about it before.)
The first and most important part of securing private money is getting a property under contract. The biggest mistake you can make in funding your deals is shopping too early for the money, yet we see it all the time.
As a private money lender, we see this scenario often:
An investor comes to us, excited about an incredible they found. They’ve learned all about the property and are on the hunt for cash. They may know the cash flow possibilities, the prospects of the property, and have done their due diligence, but they are missing the most important element to get the funding channels flowing; they haven’t secured the deal yet.
Without putting the property under contract, they have nothing to go on. No lender worth their salt will entertain the application process on a property that isn’t under contract. Why? Because as long as the property isn’t under contract, it’s up for grabs by anyone and everyone, and any time spend on that property is wasted if the house is snatched up by someone whose priority is getting it under contract.
Then, the once-excited investor is disappointed—dead in the water from the very start—and often gives up trying.
Don’t let this happen to you!
Getting a house under contract is easy with four simple steps.
- 1. Prospect and review potential properties
- 2. Write offers
- 3. Get offers accepted by the seller
- 4. Put earnest money in escrow to complete the contract.
Once you’ve completed these four steps, you have a fully executed purchase of sale agreement, the property is under contract, and you are READY to shop for cash.
Getting the cash is usually the easiest part. We shepherd you through the loan process and find the lender for you without application fee. Each successful loan you do with us builds your reputational capital. Once you’ve done one successful deal with us, the next one is even easier and each one after that feel like a piece of cake.
We’re looking forward to working with you on your next loan. Get that property under contract and get ahold of us so we can help accelerate your real estate investment success!
To Your Success;
Lee A. Arnold
The Lee Arnold System of Real Estate Investing
For our latest success stories, click HERE to read how others are finding, funding, and making money on their deals.