Skin In The Game - Gross
When you think of it , that is a pretty gross saying. I am not positive as to where exactly it came from. I am sure I can find out by using the magic of Google but I won't. What I do know is what it means for real estate investors and why it is needed. Having 'Skin In The Game' is saying that you have cash or collateral sunk into a deal. It is a question I frequently receive as a lender. There was once upon a time before 2008 that people could do 'no money down' deals as a common practice. After the bust of 2008, lenders realized that it is too dangerous to do that. A lot of a private money lenders risk can be offset by cash or collateral at closing. This also is a benefit to the borrower because it is one very easy way to allow for private money to move quickly into the hands of the client. I say this because if there is an issue that a traditional bank might have with a borrower, a private lender might still be fine to lend to the person but they will offset the lenders risk by having the borrower bring more cash to closing. Cash helps offset the lenders risk and acts as a blanket risk reduction tool many times.
Ian Walsh
215.839.3271
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