Gap Funding - What Is It?
I am frequently asked by new clients if it is alright for someone to take a second position on the property or possibly supply cash to close to make a deal work. Gap funding is normally a person or entity that comes into a deal and provides a bit of extra liquidity. The two common options are as stated which is someone finding a lender that will secure a second position against the property. The other option is for the client to form a new LLC with a possible partner and the new partners position in the entity is responsible for bringing the cash to the table to close the transaction. Most of the time this particular type of person has roughly 30k-100k in their bank and want to have a return on their money but don't have enough to fund deals. They then act as a silent partner in the transaction. The none money partner usually is the person who then handles all of the heavy lifting such as finding the deal, construction and selling it. People also ask me where they can find gap funders and my suggestion is to go to networking events. There are a lot people there that have money and want to get into real estate, but it takes time and multiple meetings before someone decides to trust you and get into a partnership.
Ian Walsh
215.839.3271
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