For fix-up investors, newly created equity (after fix-up costs) is a prime source for quick cash. Every investor I’ve ever met needs cash. House fixers are well aware that fixin’ houses for yourself doesn’t provide a paycheck on Friday night like traditional W-2 jobs. Quite often, house fix-up investors must rely on their newly created equity for grocery store money.
After fix-up – it’s fairly easy to obtain a new loan or another loan to pullout all your cash, which includes the down payment and fix-up funds. In the strict sense – borrowing has little to do with profit-making. It has more to do with increasing your debt. However, it facilitates your forward movement to make profits! Without cash you cannot move forward; therefore, your investing would be stopped. It’s also a way to relieve credit car debt used for fix-up.
Many new investors must rely on their current fix-up job profits in order to acquire their next project. This is very common! Borrowing for a down payment or to payoff rehab debt makes good sense. What doesn’t make good sense and often happens. Investors will borrow the maximum amount they can. All the funds doesn’t get used for business, but worse, the payment on the new borrowing turns the property into an alligator.
Equity funding is a great way to buy your next property, so long as the fundss are not used for personnel expenses. Often creating you own note can be sold to a passive investor for interest income. My product: ABC S OF SELLER FINANCING shows you examples – how to create your own note. See, www.fixerjay.com Educational products.