Real Estate Development Financing

How can I obtain financing for a development property I want to buy?
One of the things I always teach people is that when you're buying a property, don't get in over your head. I am not a big believer in no money down. When you buy a property that's no money down, you're really at the mercy of the market, and you may have to sell that property at a loss if the market starts to go south. If you have no equity in the property, you're at a disadvantage. I'm a bigger believer in buying a property that fits the amount of money that you can raise. If you only have $50,000, don't think about trying to buy a million dollar house. Think about buying a two hundred fifty thousand dollar condo or a smaller house in a transitional neighbourhood. It's really important to have some money down when you're buying a property, that's my advice.

Should I use a mortgage broker to get financing for a flip property?
When looking for a mortgage for a flip property, you have to realise that it's very different than getting a mortgage for a property you're going to live in permanently. Why? Because there's such things as prepayment penalties, and a lot of times banks don't want to loan to someone that they're going to know is going to sell the house in six months. I always recommend working with a mortgage broker rather than going with a bank, only because mortgage brokers have access to all the banks. A mortgage broker makes his money up front when the mortgage is obtained. A bank makes their money over time, so a bank that makes its money over time is not going to want to loan you a loan that's going to get paid off in six months.

How can I find the right mortgage broker?
When choosing a mortgage broker, be honest, tell them what you want to do, tell them that you're looking to invest in real estate and buy properties, fix them up and then flip them. One, he's then going to realize that you're going to be a repeat customer and he's going to love that. Two, never pay a mortgage broker any money up front, and if they ask for money up front, say "Thank you very much", and find someone else.

What if I am unable to flip my house at a profit?
One of the safest ways to invest in real estate, which means when you're buying a property that you're going to fix up and flip is having your exit plan ahead of time. What that means is that if you fix up a property and you want to go to sell it, I want you to find properties that you have the option to sell, hold or and rent it. You want to look for properties that are actually available, beautiful and wonderful and that someone might want to rent if you had to. That's called an exit strategy meaning that way you don't have to go and put it on the market if you don't want to. So, having a property that could be rentable is a great value and a great asset.

What makes a house 'rentable'?
What makes a property rentable is a great home, for example in a good neighborhood where there are good schools. A three-bedroom home seems to be about the average, and one that doesn't have a lot of things that need to be maintained. One without a huge, big backyard, one that's just a nice, great comfortable home with good amenities in a good location.