Getting Your Wholesale Buyers Financed
Hard Money Brokers are not only a great source of easy financing for yourself when buying properties, but they are also great to use for getting your buyers financed when you are dealing in the Wholesaling Quadrant. Knowing how to help your flip buyers get financed helps you to get your properties resold faster. Furthermore, the fact that you can assist the buyer in getting quick financing with money for repairs, can even increase the sales price you can get on the flip.
The key is to know the terms at which the broker will lend money. Then when a buyer calls you on a wholesale deal you are selling, you can tell the investor that if they like the property, you can get them a loan at X amount of dollars at X interest rate and so on. If they are interested, they can give you a deposit and you will then send them to your broker. You can even agree to give them their deposit back, if your broker will not finance them. This way, they have nothing to lose.
Of course, you don’t want to send a bunch of buyers to your hard money brokers thus giving away your financing sources. Therefore, you should only refer a buyer after they have signed a sales agreement and given you a deposit. You can also get a non-circumvention agreement from the broker. The agreement should state that the broker agrees not to lend money to an investor (on other deals) who has received a loan in connection with the purchasing of one of your properties. Hard money brokers understand the competitive world of real estate investing and most do not have a problem with signing such an agreement especially seeing as how you will be sending new borrowers their way.
You should also get a non-circumvention agreement signed if you get one of your private lenders or partners to finance your buyer. In either case, you can have the broker or lender sign an agreement, as well as have the buyer sign a separate copy.
Be Careful Who You Bring To Your Sources
You should also be careful who you take to your hard money sources. If the investor you refer over does not follow through on the investment and the private lender has to take that property back, this can reflect badly on you. You don’t want to get a reputation of providing bad borrowers. Otherwise, the hard money lenders will quickly cut you off, even though you aren’t the one who defaulted on the loan.
Online Sources For Finding Private Lenders & Hard Money Lenders
You can easily now refer your wholesale buyers to online resources such at FlipLender.com. This portal for private lenders and hard money lenders allows multiple lenders to compete to fund the deal you are wholesaling to your buyer. As a result, your buyers can quickly and easily find a private lender.