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A Glowing Example of Why Private Money is Critical to Success
If you are a real estate investor and still hoping that mortgages are a good choice in financing for your deals, I submit the following email to you. I received this from a real estate investor client of mine. In his email, he describes (unsolicited by me) the financing process he is going through with a mortgage company right now.
Here it is:
"...The underwriter caused a delay by requesting a builder inspect and verify the floor because the appraisor thought there was a slight slope. This seemed strange, since the inspector didn't mention this. Also, originally the first appraisor didn't request this. But later, the lender requested a second appraisal, which also caused delay. The builder person I sent out, apparently didn't have some 'engineering' classification. So, I told my realtor I was not paying for a second certification on the floor. I believe the buyers realtor said she'd take it out of her commission at close. Recently as today, the second builder requested pre-payment before supplying the letter to the underwriter. I believe my realtor explained that the original agreement was for this to be paid at close. I received a call a little while ago from my realtor saying the builder has agreed to provide the letter to the underwriter, with payment occuring at close; as originally agreed. That's the update on that."
Wow. You just can't make this stuff up.
I don't know about you, but it sounds like the mortgage company has this investor's fate in their hands. When your goal is to build long term wealth through real estate, this is definitely not the position you want to be in - and a big reason why private money is the critical ingredient to your success.
If I took a poll of 100 random real estate investors, I am willing to be that I would find the majority of them knew a good deal from a bad one. But, from those same 100 random investors, I would bet that only 1 or 2 would be actively working with private money investors to fund their deals. Given that mortgages are like Mission Impossible, lines of credit are disappearing and hard money lenders are gone like the wind - what other options do you have?
A pleasant surprise you'll find as you raise private investment capital is that it is much easier than going through the mortgage process. You don't have to put up with all kinds of ridiculous requests (many seem sadistic), jump through hoops of fire or pledge your first born child. Private money is not only superior but a much easier source of financing. In fact, a perfect storm has developed to drive private money to you and there is a bigger pool of funds for you to tap into then ever before. Consider this:
Mortgage lenders leaving investors high and dry = demand for private money
Stock market and government bailouts/spending driving higher pools of capital looking for a home = supply for private money
All you have to do is tap into the reservoir. And, don't worry - there's plenty to go around.
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