A couple of days ago I laid out how awesome it would be to have someone fund your deals with 100% LTV but I think I may have skirted over something that's rather important.
It's awesome to be able to have access to these 100% LTV financial resources in my new2014 Motherload Resource Directory but, since these are private investors that you'll be working with, they're not just going to write you a check for any deal.
You do have to prove that your deal is a cash flowing investment. This is done through an executive summary and, in some cases, a mini business plan.
Each private investor has different requirements to what they want to see (and they let you know in full detail what that is).
Here's a few tips for you if you're interested in using these investors for your deals:
1) When doing your numbers on a deal in the CFE (Cash Flow Evaluator), make sure you account for a higher interest rate on a 100% LTV loan. This can range from 9% to 16% on average and these loans are typically interest only which means no principle is ever paid. If you borrow $1,000,000 you'll still owe that same $1,000,000 in 10 years from now.
2) Make sure you're targeting deals that are slightly underperforming where you can still get a deal on the asking price. You don't want properties that are at a 50% occupancy level and you don't want to pay top dollar for a fully occupied property either otherwise the numbers won't work on both accounts.
3) You will need to have a solid future proforma of the property regardless of how it's performing right now. Even a 100% occupied property (today) will still have a higher cash flow value in the years to come provided that you find the right value-add opportunities for the property. The more you can show a higher future cash flow value, the faster you'll be able to get private investors and lenders to write checks to cover your 100% LTVs.
So, again, private investors and lenders won't lend to you based on you knowing how to pick up a phone to call them and on the sheer fact that you're flapping your lips to hit them up for money.
You have to show them that you have a solid cash flowing deal.
Here are some ground rules when you get the 2014 Motherload Resource Directory:
1) Do not call any of these people unless you have a deal. Period. Otherwise they won't talk to you. (And I don't blame them because without a deal you're wasting their time.)
2) Make sure your deal has at least an 8% CAP rate at a 100% LTV.
3) The "hotter" the area, the faster these people will write checks for your deals. They love Florida, Texas, California, Arizona, New York, and most other states. Believe it or not, they're not seeing value in areas that are still borderline "depressed" such as Memphis, Atlanta, Detroit, and Las Vegas to name a few.
The deal on the Motherload is running out. Click on the link below to check it out:
See you at the top!