Stuck on your Financing? Get a Bigger Hammer!

In our last blog, we talked about how sometimes you need a bigger hammer to get the job done. So how does this apply to your financing? There are three ways to finance a project. You can ask the seller to finance the property for you. You can bring in partners and have them put up the money to finance the project. You can get a loan to pay for a majority of the purchase price and use your own funds or your investors’ funds to pay the difference.

So, what do you do when none of those options works today? You can bang your head against the wall and keep trying to do things exactly the same way. You can give up because nothing has worked, or you can get a bigger hammer until you finally get it done.

So how do you get a bigger hammer? It might be a situation where if the only option is seller financing, you might have to sweeten the deal until the seller agrees to finance the property for you. You might have to make the terms better by offering a higher interest rate. You might have to increase your down payment so that the seller feels more secure. You might have to do both. Go find a bigger hammer until you can make it work.

If you are bringing in investors, but you can’t get enough money to finance the project then you have two options. You can find more investors until you have enough money, or you can find better investors. You might be working with the wrong people. You might need to go out and find better investors who are able to bring more money or more buying power to the table. If you keep looking for the same type of investor, you will end up with the same results. Go find a bigger hammer until you have the right group of investors.

Finally, if you are financing the project, are you working with the right lender? There are some lenders who specialize in certain types of loans. If you are trying to get an SBA loan and your lender has never done an SBA loan, you need to pivot and find a different lender. Don’t keep using the same hammer expecting a different result. You might have to put a different amount down in order to get a bank to work with you. You might have to pay a higher interest rate in order to make the project work. As long as your numbers are still profitable, and your project still makes sense, it is better to do the deal than not do the deal. Go get a bigger hammer.

Sometimes we get so stuck in our current mindset that it is hard to think outside the box. Or we feel like we need to be loyal to the people we are working with and so we don’t want to let them down. You may need to make changes to the way that you are doing things or the group that you are working with if you are going to take your business to the next level. That doesn’t mean that you are going to betray the current investors that you are working with, it just means that you might have to have a different group of investors for a new type of project.

Don’t give up when things get difficult. Instead, find a way to get the project done. Find a bigger hammer until you can accomplish your goals. As always, happy investing.