Right now I'm in the midst of checking something out for myself, acting as my own "guinea pig" of sorts.
It seems that one of the hottest new ways of getting all the cash you need for investment real estate is in something called 144A Bond Funding.
And what this program does is nothing short of freaking amazing!
First of all, I should mention that getting 100% financing is considered the "Holy Grail" for real estate investing. Imagine never having to put in a single cent into a real estate deal yet reaping all of the cash flow profits. While I never thought this was possible before, I now know that it's possible through this very unique Bond Funding program.
Let me give you some of the highlights to this program that will blow your mind:
- 100% LTV
- No personal guarantee
- No credit checks
- No asset verification (AKA no needing "financials")
- No loss of equity in your business
- Closing timeline: 90 to 120 days
- Flexible repayment terms
And as long as you have a "stabilized" and strong cash flowing real estate property to invest in, you can use this Bond Funding program.
Now, before...you had to find a property that was $10 million or higher. Even worse, you had to show cash liquid in your bank account of 1% to 2% of that amount. That means your lowest end deal would have required you to show cash of $100,000 to $200,000. You would have been able to get something called a VOD (or verification of deposit) for this cash, even showing that the money belongs to you. However, VODs cost money and sometimes they're not cheap.
I never wanted to use the Bond Funding program because of this $10 million or higher threshold only because my deals are usually $3 million and under. So, I didn't feel that I had use for the program. That is...until now!
With this new change in the Bond Funding program, they will do deals as low as $1 million. Yaaahhhhh! That's what I've been waiting for! And to participate in the program, you have to show 1% to 2% liquid or, for a $1 million deal, that's only $10,000 to $20,000 in a bank account. (Again, you an buy a VOD which would be only a few hundred bucks or more to do for this much lower amount.)
Now, you don't have to put this 1% to 2% into escrow to close. They just need to see that you have this liquid.
Note: the points are high -- around 10 which accounts for 10% of the property purchase price. So, you're million-dollar property would have $100,000 in loan points. But this is rolled into your loan so NO POINTS UP FRONT! Whooooooo!!!
Finally: this is a fully amortized 30-year loan term (not interest-only unless you're doing construction). Yes, the interest will be higher than a conventional loan, somewhere between 5% and 10%...but who gives a crap?! You're getting a million-dollar (or more) apartment building (or other real estate) for NOTHING!
What's the catch? None that I can tell. But I'm just starting through the process right now. It seems that the way this program works is that they raise capital through a variety of different investors and corporations. They abide by all the Regulation D (SEC) nonsense while you derive the direct benefit from the program without any of the hassle.
How do they make their money?
Loan points (rolled into the loan) and the heavy-duty interest while YOU manage the asset (thus continuing to make them loads of cash for raising the initial capital for you).
Pretty freaking great deal, isn't it??
I have to be honest: I've never seen ANYTHING this incredibly freaking fantastic when it comes to getting money for cash flowing real estate where you DON'T have to share ANY of the equity or cash flow with someone else. You get all the profits/proceeds...but you're paying a higher interest rate.
Oh, wait. One more thing. The loan is -- ready for this?? -- NON-RECOURSE!! This means that you take NO personal responsibility for it and it doesn't show up on your personal credit report.
So, how do you find out more about this Bond Program and how to take advantage of it?
This is where you'll not only learn how to get a VOD (if you need it) but also exactly how to participate in this 100% LTV Bond program.
See you at the top!