Whether you’re new to fixing and flipping or you’re a seasoned investor, the option to use your cash for a deal can be tempting.
But using a short-term loan that is secured by real estate can be a valuable tool, can help you manage risk, and is easier than you think. Here are my top 6 reasons why using private money may be your best option (but read and judge for yourself):
1. You work hard for your money, so keep it! I’m all for making your money work for you–as anyone who’s been in a room with me for ten minutes can tell you. For instance, I think owning a home free and clear is one of the most ridiculous things you can do. If you own a home for $300,000, that’s $300,000 sitting idly that isn’t yielding a return on investment. You can’t even write off the mortgage interest!
But, when it comes to investing in real estate flips, you should have years of knowledge and experience to assume the risk in fully funding a property by yourself. Save your money for your education, acquiring rental properties (should you choose to buy and hold), or use your cash to be a lender if you have enough of it. Do you have funds that you want to put to work for you? CLICK HERE to learn more about becoming an accredited investor!
2. It’s fast. Most private money loans can be approved and processed quickly; in a matter of days or weeks, depending on how swiftly you can provide the needed information. Compare that to a bank loan at 30-40 days (on average), a second mortgage at 50-60 days (average), or paying off mountains of credit card debt because you got in over your head on a project that didn’t make you money and now you’re drowning in a cycle of minimum payments that don’t satisfy your principle debt.
3. You can do more deals. First, you can have several private money loans at a time (our loan officers are happy to answer questions about this: 800-43-6051). Second, offering a quick close on a property with a private money loan sets your offer apart from others, making it more appealing to the seller, especially when compared to slower, conventional financing.
4. Increased competition has led to competitive rates. This is great news for you! In 2017, we’re lending out more money with more competitive rates and terms than ever before. Banks compete to an extent but don’t have to and often don’t as much as they promise. Oh, and who does your cash fight with to make sure you’re making maximum profits?
5. The deal drives the loan. Maybe it seems immediately easier to use your cash or credit cards. But if you’re new—especially if you’re new—you may think a property is a good deal when it isn’t. Trust me when I tell you not to learn the hard way on this one.
I’ve had countless clients, friends, and acquaintances say that they should’ve followed my advice to use COGO for both the loan of a property AND the renovations in the form of our draw system. The WRONG time to be wishing you had followed the COGO draw system is when you’re in the middle of a project with contractors begging for more money while you’re confused about where your budget has gone. (For one such cautionary tale that thankfully had a happy ending, CLICK HERE.) But, that’s the beauty of COGO; we’ve spent endless hours refining our process to be user-friendly, understandable, and most of all, to protect you! Your cold, hard cash looks flashy when you start throwing it around, but it won’t protect you from a bad investment.
… this brings me to my last point…
6. Private money comes with expert advice. Here at COGO Capital, we aren’t going to give you a loan that doesn’t make sense. We aren’t going to approve a property that is going to lose you money and our loan officers are always just a phone call away for any problems, snags, or issues that may arise. Is your cash backed with expert advice?
7. You don’t HAVE any money. Private money is available to you even if you don’t have your own funds, capital, or a home of your own. Maybe you’re in this category, and you need to hear it, so let me repeat myself: Qualifying for a private money loan doesn’t require perfect credit or capital of your own. It’s deal-driven. If you can find the deal, we can loan the money. The property is the collateral, not your personal finances. For many, it’s the only option until you build your capital, but that doesn’t make it any less of a good reason.
We want to see you succeed regardless of whether you use your own money or ours. But if private money makes sense and you want to see if you qualify for a private money loan, CLICK HERE for a free quote! You can learn more about COGO by joining our New Monthly Webinar Series; CLICK HERE to watch the latest one. Or, if you’re serious about using private money, I’m paying the $497 seat price for a set number of people to attend the next Funding Tour, where in addition to the 3 full days of education, you’ll receive $250,000 in pre-approved funds for your next deal! CLICK HERE for details or call 800-533-1622 to secure your seat while I’m still paying for them!
To Your Success;
Lee A. Arnold
The Lee Arnold System of Real Estate Investing
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