Different Financing types

[Jose Godreau]

Hey BP, 

I wanted to do a quick post on the different ways you could potentially fund your current project whether it be a flip, rental, etc. 

1. Conventional: This loan is a bank loan that is looked at as cash, there are no contingencies and appraisals are easier than you would find in an FHA loan. Also your down payment would be higher and your credit scores have to be higher as well. While most investors don't use conventional loans to fund their projects, some small banks will give a conventional loan to investors looking to flip and only charge interest.

2. FHA: This loan is called 203k rehab loan and is a mortgage given out by the federal housing administration. It is a Great way for new investors to get into a project with less risk. There is a lower down payment, more inspections, and the loan makes you hold on to the property for a designated amount of time before you can sell it. They also make one pay for mortgage insurance in case they default on the loan. 

3. Hard money: This is a loan given out by a hard money broker usually with higher interest rates. If you're doing a lot of volume it's a good way to get into projects. As long as you run your numbers and factor in the higher interest rates you'll be fine. 

4. Private lending: This is a loan given out by someone who has cash on hand, whether it be cash, IRA, or Home Equity Line of Credit. This is the best loan you can receive because everything is negotiable. You have a better chance of acquiring this kind of loan after you have a decent track record of projects.

5. Gap Funder: This is like private lending in the way that you get this from a 3rd party, but different in the fact that the loan you are receiving only covers what your initial loan wont cover. Its a good way to get into a property with more leverage but is also harder to acquire unless you have a decent track record. 

I specialize in south jersey but areas like central jersey, and north jersey should also be able to use this information as well as most other places. These are the most frequent ways i've seen investors use to fund their projects. There are of course more creative ways to fund projects and if you have any other ideas or if you would like to add anything to this list please comment below !