Real Estate Investing: The Three Legged Stool

Okay, here it is……every bank, every lender, every private funder has a cookie cutter deal that’s right for them. They all list one or two guidelines slightly different than the other, bells and whistles here, bells and whistles there, but at the end of the day, we all look at the same three basic things. Which leads me to the subject title “The Three Legged Stool.”

For this topic, the 3 legs are “Cash, Credit, and Collateral.” If you’re not knocking on your retail banks door, your stool will need to be fairly strong if not ironclad. With banks, if you have one of the three legs broken, it’s not that your stool is wobbly, you don’t have a stool to sit on at all or approved loan. We’re talking about liquid cash to put in the deal, great credit, and a property that meets their secondary market guidelines. Then you have your private sector lenders, hard money, private equity, etc. The private sector is often investor direct and doesn’t have to adhere to secondary market guidelines to sell the paper. With all that said, some lenders are more credit focused than others, some rely heavily on the amount of money down (skin in the game), and others may have more of a focus on the collateral or property. But make no mistake about it, you will need to answer all 3 or simply fund the project yourself.

This open forum is see what you’re experiencing in the market place, creating platforms and bridges to propel real estate investing.