I Found a Property Deal But Where Do I Get Money to Purchase the Property?

I see the question on real estate forums or have people ask me all the time, “I found a property deal, but where do I get the money to purchase a property?”  If you're not looking to assign a real estate contract, or you know the house is a real estate deal but might take a few weeks to sell, then you want to buy the property.  Where do you get money to purchase this property?

I’ll discuss a few examples of ways to use your own money and other people's money that we've utilized in the past.

First one is ways to purchase properties using your own money. You might have a self directed IRA that you could use. In your IRA most people purchase mutual funds, stocks and bonds. Maybe you subscribe to a self directed IRA where you can invest in anything such as real estate. A lot of people utilize this, and it's a great way to grow your retirement accounts. 

Another way is if you don't have much debt on your personal property and it's worth a lot of money, you could pull out a home equity line of credit through a bank.  $50,000,  $100,000,  $200,000, whatever your equity is on your property. Interest rates are real low rates right now and it's interest only payments when you use your HELOC. So you could utilize six figures from your own personal property to purchase investment properties that you can purchase and quickly wholesale, or maybe do renovations and resell, or buy them as rentals. If wholesaling or rehabbing, when you sell your property you can repay the HELOC and get ready for the next deal.  If you purchase the investment as a rental, then after you fix it up and have it rented, you can refinance and pay back your home equity line of credit.  

You might have savings accounts that you can use to purchase properties.


If you have permanent life insurance, there's usually cash value within your policy. That's a quick way you can get money in a few days. It's the savings account within your permanent life insurance product. 

So those are a few examples just from your own money that you might have access to purchase properties to wholesale or as an investment property.

Now let's discuss other people's money. So some of the ways that we have utilized is transactional funding.  Transactional funding is used when you purchase the property and a week later, or same day or a month later, you resell the property.  It varies with what people or companies charge. Anywhere from $500 to $1,500 to use transactional funding on a short term basis for a few days or a few weeks. 


Another way to use other people’s money is hard money lenders. They're going to cost a little bit more, however, you're going to still make money on it. Hard money lenders usually charge points and there's going to be higher interest rates. Anywhere from 10% to 15% on average.

And another example to use other people’s money is to get a business line of credit in your business that you have as an opportunity to purchase properties. 

And then finally one that we utilize a lot is private lenders.  Private Lenders are just individuals that have plenty of money in savings, and they don't want to earn 0% interest in a bank account somewhere. You meet these people through networking such as real estate investment groups, country clubs, cocktail parties. We just talked to people about what we do and people are interested and they want opportunities to get into real estate without actually actively managing projects.  This is a great way for them to diversify their portfolio and invest with real estate investors such as ourselves.

These private lending deals vary significantly. It could be tied to an individual house where you use a mortgage and note on the deal to protect the private lender's investment. Some private lenders are okay with receiving quarterly interest payments from us.  They lend us $X amount of dollars and they receive quarterly interest only payments. 


There are several ways that you could utilize your own money or other people's money to purchase real estate properties, whether it is for wholesaling REO properties, where you can't assign a contract, or if you are purchasing from a homeowner and you can't find that buyer right away, but you know, it's a deal and you don't want the contract expire. You could close on the property and then resell it a little bit later and still make money on the property and not have that contract expired with the buyer. 
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So hopefully these ideas are helpful and better answer the question I Found a Property Deal But Where Do I Get Money to Purchase the Property? If you want to learn more visit a video on this topic at https://youtu.be/84HFqN_m9eY.