Step #1...How am I going to pay for this?

There are many ways that an investor can come up with the money needed to purchase investment properties. Whether you are local to the area or wish to invest as an absentee, There are a lot of things that need to work in order for you to win...The first step to this is making offers that are bona fide. This means you have to prove to the seller that you are serious, and you are willing to put your money where your mouth is...

This blog post is going to go over a few different options you have, as well as the pros and cons of these options. 

After all ...You are serious, right? 

Let's make sure when you go to the market you appear to be. The most important thing you can do as a professional is look like a professional. Anything short of that and you'll be wasting your time... and losing out on a lot of opportunities as time goes on. 

Nobody wants to waste their time now...Do they?

In today's day and age there are a few ways you can purchase an investment property. The easiest and most effective way is by making an all-cash offer. For these, all you will need is a bank statement to show you have the available funds to buy. If you want to get in on the off-market deals that are sold fast, and at a discount...This is the way to go. 

In many cases you can also appear as a cash buyer using your self-directed IRA, Roth IRA, or similar products. Or for the more experienced investor the utilization of 1031 exchanges are also a very valuable option. These products allow you to take your own interest-bearing money and invest it in your real estate portfolio. With this option you will almost always outpace the traditional investment market provided to you by some pencil whipping account investment manager, or custodian. 

These types of people will try to tell you that if you take money from your IRA to buy real estate you could somehow miss out on years of compounding interest. The truth is...Real Estate will almost always outpace these stock market investments. If you factor in buying at a discount, holding long term, raising rent over time, and general appreciation in value. The traditional 401k type of investment is not going to come close to what you can do in Real Estate. Plus, you are not in control of your money when you invest in the stock market. Someone else is...They also make money to constantly move your money around. So, it's in their best interest to manage YOUR money. Not the other way around...This is a fact.

Myself...I like to put my own fate in my own hands. I have achieved great success in doing so...This will never change. You should feel the same way. Let's be honest...Will someone other than yourself really put YOU first? It's not likely. Think about that.

Another way you can finance your endeavors as an investor is the conventional lending market. This is your traditional way to get a loan from a bank. Or you can go to a mortgage broker, who will in turn shop you around to find you a product that fits you best. They'll gather information from you such as pay stubs, tax returns, bank account info, cash on hand, and credit scores. These loans are issued in your personal name. This can be a good way to leverage a little bit of your money (Usually 20% down) to get into ownership of a property. You can then calculate how much your loan payment amount will be including taxes and insurance, to figure out if the rent minus your expenses will leave you with enough passive income to pay down your down payment with the tenant’s money. This is called a cash-on-cash return...We can get into that in another article. The goal of this would be to eventually have a property that is rented with $0 out of your own pocket. This can be done...I do it frequently for a lot of my investors. Usually within 1-2 years this can be achieved per door. Wealthy people think this way... and they are rich for taking the time to have this mindset. Then they go after it and make it happen. You can too. 

The only downside to the conventional market is the loans have a lot of criteria you will need to meet to get approved. You will also be limited to how many houses you can own with mortgages on them...Fannie Mae only allows up to 10 per person. If you are married, you can have up to 20. Seems like a lot doesn’t it? Well for some it just is not enough! I can tell you...You'll run through these fast when you get the ball rolling. That's if you become a hyper focused house buying machine like me. That's right...It's a sickness for which there is no cure. Some of us catch the bug...Some don't.

Lastly, we can go over what they call DSCR (Debt Service Coverage Ratio) financing. They call these lenders NON-QM. These lenders use only your credit score, the current monthly rent. and some other minor criteria to qualify you for finance. These loans require no income verification in most cases. They also allow you to purchase property in your LLC and not your personal name. They cost a little more, but they are way easier to get. Usually, you will pay a little more interest for the ease of qualification. For the more skilled investor that wants to finance...This is a very common way to go. We close on loans like this weekly. A ton of my investors have great success procuring many homes quickly over a short amount of time. When you learn how money works with leveraging you can really put a product like this to use. But with any finance you will be limited to sellers that will accept it. This will leave you searching mostly for MLS listed deals as the majority of those have sellers that will allow you to finance. That doesn't mean you can't get a deal though...There are always deals to be found when you work with the right agent.

I have made my reputation helping investors invest, find deals, and turn them into great returns. When you deal with a truly investment minded professional in the Metro Detroit market you will win. Here at Detroit Buy Hold Invest...That's our mission. We build winners here from the ground up Or we take winners to the next level.

Let's talk about how we can change your path in life. Both professionally, as well as personally. People deserve more in life. We want to help you get there!

Feel free to drop your questions or topics if you like. I want to hear your thoughts and questions.