If you’re a real estate investor and you are searching for the most effective way to finance real estate investment deals then this article is for you. There are generally three different things that you must determine prior to funding a real estate transaction using a private money lender. Those three things are the after repaired value, fixup costs and the acquisition costs.
To begin with we want to take a look at the after repaired value. The after repaired value is defined as the price of the property will sell within 30 days after it has been fixed up. This value is based on an analysis of the active, it’s pending sales and under contracts. It is important to remember that you must analyze only properties which have been fixed up and not look at properties that are not fixed up.
Next you need to take a close look at how much it will cost to fix the property a this is considered the construction or fixup costs. It is critical that you work with a qualified and experienced general contractor who can give you a bit on the repairs. Later in your career after completing several projects you can fill free to do the estimate of repairs on your own. But remember you must always work with a qualified general contractor.
Finally your private money lender will require that you have a buying formula which has determined your acquisition costs. Rehab loan companies will want to know how much money you are going to pay for the property. They will also want to know that you are a sophisticated real estate investor, and what better way to show them that then my telling them you have any buying formula for every property purchase.
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