Quote: (05-26-2013 09:18 AM)Tytalus Wrote:
I'm looking at doing some investments in a type of real estate debt where I can get interest payments 6% per year, or if the person doesn't pay, I get their property ahead of any other creditors. I'm needing about $100k in money to get rolling on this. Any thoughts on how to borrow that kind of money on the cheap?
I'm in Canada, and have no experience with loans other than auto loans and student loans. Unfortunately I have both, combined with my rent consumes a good portion of my income. What I need is some kind of non traditional loan (no idea what these are called in the finance world) where I can pay interest only with the term between 1 or 2 years. Thoughts?
In America, w/o a track record, you won't get a loan from a bank for that kind of speculative deal. With a track record, that kind of thing is possible, but it's still not a deal that your local Wells Fargo would fund.
I would imagine that Canada is the same.
The typical American way to do this is to take out a 2nd mortgage on your own property and then gamble with it. Either that or cash out an IRA.
The other American solution is using private money, and there's a fair amount of it available. If I found some sort of deal like that in Houston, I'd get my documents and facts in order and then go to a large Real Estate Investment Club in my area. Usually there are quite a few private money deals and hard money lenders who will listen to your pitch.
The third way I can think of doing it would require more money and expertise than you currently have, and would possibly involve an attorney. In the states you can draw up an agreement and then advertise for investors in the newspapers and through direct mail. It's fairly involved and the legal work is typically in the XX,XXX range. But if you had 5 figures to spend....
A fourth way, sort of a derivation of the 3rd, is to partner up with people you know, friends, family, co-workers.
Off rip though, you're probably in a better position as finder rather than investor. Finding the money in the Real Estate Investor Circle and bringing them to the people with a deal can net you a nice 1% or more.
And in any case, a lot of these guys are going to look into YOU and see whether or not you're trust worthy. Grown ups might shake hands on a deal, but there's still due diligence and contracts.
WIA