Plenty of Money or Not Enough Money?
by Kalinda Stevenson, PhD
If the deal is right, there is plenty of money available to fund it.
In the consumer view of the world, money is scarce. Consumers who believe that they have to buy investment property with their own money and their own credit are making a basic assumption: If you want to invest in real estate, you have to do alone.
Where do consumers go for money? They go to banks. And what happens at the bank? If you are a consumer, the bank will require you to provide a vast amount of personal information. You might feel that you have to beg to get the money. And after providing all of the personal information, it is up to the bank to decide if you are worthy to borrow the money.
From a consumer money perspective, the most important issue is whether or not you have money and good credit. Consumers who want to borrow from the bank often get the impression that the bank is only interested in loaning money to people who don't need it, and who have excellent credit. Throughout the process, you are not simply asking for money. The bank is judging whether or not you are worthy to receive any money.
Successful real estate investors know something that the average consumer doesn't know. There is plenty of money available for good deals and you don't have to go to the bank to get it. Why is this? It is because there are private lenders who are ready, willing, and able to fund good real estate deals. In fact, you don't ever have to ask a bank for money for real estate investing.
You might not have it, but someone has the money you need. If you want to buy a property, and you need $10,000 as a down payment, the consumer mindset says, \"I need $10,000 for a down payment. I don\'t have $10,000, therefore, I can\'t buy the property.\" Investors know that somebody out there has $10,000 to invest in the property. I might not have it, but you might have it. Investors know: \"I don\'t need to have my own money. I can use other people\'s money.\"
If you have an investor and a consumer looking at the same property, the consumer will very likely say: \"I can\'t buy this because I don\'t have enough money and the bank won\'t loan me the money because I am not credit worthy.\"
In the same situation, the investor will say, "I know that this is a good deal. I'll find a private lender willing to fund this deal so that I can buy the property." The investor knows that private lenders first of all want to know if this is a good investment. They don't decide whether or not to fund the deal based only on your money and your credit. The fact is, if the investment really is a good deal, you will be able to find a private investor willing to provide the money.
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