Lee Arnold, CEO and founder of Cogo Capital, shares pointers on finding private funding for real estate investors
Attract Private Funding for Your Real Estate Deal
Investors often ask the question, how do I find funding? What investors should really be doing is allowing funding to find them. Let me explain.
Funding, like so many things in life, is about attraction. We get who and what we attract. It’s the law of attraction and it works in every aspect of your life, including finance.
So how do you “attract” funding?
Reduce Your Risk Profile
You make yourself attractive to a lender by reducing your risk profile. Some questions we ask at Cogo Capital and things we look for when evaluating borrowers, includes:
- How many deals have you done?
- How long have you been an investor?
- What’s your credit score?
- How much cash do you have in the bank?
- Are you accredited?
We also will ask for tax returns and perform background checks.
Having the answers to these questions will go a long way in providing assurances to a lender.
Bring Low-Risk Deals to the Table
I started investing in real estate when I was 18-years-old. My credit was shot and I was three months behind in my truck payments. But I was able to find an investor. How?
I brought them a low-risk deal.
For example, I would find a house with an After Repair Value (ARV) of $200,000. I would borrow $100,000 and get the property under contract for $60,000. That would leave me $40,000 to make repairs. This is an example of a 50 percent Loan to Value. Simply put, the value of the home after I make repairs is 50 percent greater than the price of the loan. These are the kinds of opportunities lenders want to see.
And these deals are out there! It takes a little work to find, but these are the types of opportunities you want to get under contract.
By finding a great deal, less questions need to be asked and less information is required. You make it easier for the lender by reducing their risk in making a loan. They know—because of the numbers—that you will be able to repay the loan.
Interested in getting funding to secure your next real estate purchase? Cogo Capital can help! We assist real estate investors by providing private money lending. For more information call (800) 473-6054 or apply online today.