Using escrow to get deals done

[Michael Henry]

I feel that the riskiest part of a real estate deal is the construction/rehab phase for the project. Many of the cons and unfortunate stories are the ones where an investor gave a partner, many times out of state partner,  the money to do the rehab and the work was not done.  The easiest way to protect yourself and win over private lenders or partners is by putting the construction funds in escrow. Some contractors will fund their portion knowing that the money is set aside.   

I had an investor on the fence about lending me money where he was going to take the 1st position on a mortgage and I have the rehab money. I convinced him by putting my money into escrow. It was a no brainer deal at that point and he moved forward with the deal. 

I think there might be some more ways to use escrow to win over partners. 

Any thoughts PB   

MH 

Milwaukee, WI