60 Second Insights – Funding Deals
Today’s question is, how do I fund my deals?
Hard money is secured by real estate. A hard money lender typically will charge a 11-15% interest plus points. A point is 1% of the loan amount. They will get interest on their money every month until you are out of the deal which is typically under a year. Debt partners- a debt partner usually comes into the deal in a promissory note. They typically charge 10% interest, they get paid on an annual basis and they are in the deal for 2-3 years then they get their money back. Equity partners-this is the way savvy investors invest in real estate. It’s a syndication you’re portion 100,000 dollars, you would get 9% first year, 10% the second 12%, the third that is 31% cash on cash return from what we buy the property for to what we sell the property for, you would get another 50% of that. Add the figures together, divide by 3 and you get a 27% annualized return. Bingo! You’re in. That’s the way serious investors invest. Got a burning question? Leave it in the comments section below. And next week we might be answering your question.