Every deal is unique, which means that financing them cannot take a cookie-cutter approach. Not all deals immediately qualify for long-term permanent debt, calling for creative solutions. Our guest today, William Bronchick shares with us his extensive insights on creative financing. He uses several deals that he has worked on as examples to shed light on how creative financing works in practice.
Our gracious sponsor:
DC4RE is now offering customers digital tools allowing them to automate their marketing efforts all while managing deals and contacts in a custom real estate CRM solution designed specifically for real estate professionals. For more information and real life case studies visit www.dc4re.com.
Watch the episode here:
Listen to the podcast here:
He begins by talking about assuming loans, what it entails and why this strategy has several advantages if it is a possibility on a deal. He then talks about bridge/gap/mezzanine debt, which can be used if it is not possible to secure long-term financing on an investment. This should not be taken lightly, as it impedes cash flow and also has a time limit. It is, however, a great tool to use to get the property to a state where securing long-term debt is more likely. Just make sure you know you can get the property where it needs to be! William also shares some other creative financing insights, such as credential building techniques, the ideal types of loans and much more. He is not only an expert lawyer but possesses an intricate understanding of many levels of real estate investing. To hear more, tune in today!
Key Points From This Episode:
- Some of the work William does and how he is different from other attorneys.
- A recent deal where William has applied creative finance and the outcome of it.
- The most common issues that occur when trying to assume a loan.
- An advantage of assuming a loan is that some of the equity is already chipped away.
- Discover what bridge financing/debt is and the ways that it can be used.
- Tight cash flow and time balloon – the major disadvantages of bridge debt!
- The credentials required to be able to access bridge debt.
- Why William recommends getting a fixed-rate loan for as long as is possible.
- If you do not qualify for non-recourse loans, partner with someone who does.
- Where possible, William recommends steering clear from signing on loans.
- The ramifications for passive investors and general partners if a deal goes bad.
- Why it is useful both for the investors and partners for partners to have errors and omissions insurance.
- Always raise more capital and do not underestimate your cash flow needs.
- How William prepares for the downturn – buy more property and wait it out!
- All mistakes are simply lessons in disguise.
[bctt tweet=”Liability is based on the failure to do something you are supposed to do. — @bronchick” username=”whitney_sewell”]
Links Mentioned in Today’s Episode:
About William Bronchick
William Bronchick, Host of Legalwiz.com is a nationally-known attorney, author, entrepreneur, and public speaker. Mr. William Bronchick has been practicing law and investing in real estate since the early 90’s, having been involved in thousands of real estate transactions. He has trained countless people all over the Country to become financially successful, speaking to audiences of as many as 16,000 at mega-events, sharing the stage with names like Rudy Guliani, Steve Forbes, and Colin Powell. His best-selling book, “Flipping Properties”, was named one of the ten best real estate books of the year by the Chicago Tribune. William Bronchick is also the author of the highly acclaimed books, “Financing Secrets of a Millionaire Real Estate Investor”,”Wealth Protection Secrets of a Millionaire Real Estate Investor”, “Defensive Real Estate Investing”, “How to Sell a House Fast in a Slow Real Estate Market”, and his latest work, “The Business of Flipping Homes.” William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the Executive Director and founder of the College of American Real Estate Investors. He is admitted to practice law before the bars of New York and Colorado.
Love the show? Subscribe, rate, review, and share!
Join the Real Estate Syndication Show Community: