What is Gap Funding and how does it Work?
Gap Funding – A Second Position Financing
Gap funding for real estate investors generally comes in as 2nd position financing when the 1st position loan isn’t quite enough to make the deal work or you just prefer to have less money out of your pocket! We also refer to this as “down payment assistance program for investors.” For strong borrowers and if the numbers work and are within our ARV (after repair/built value) and LTV guidelines we can even roll in your interest payments and closing costs! Thereby greatly reducing your out of pocket expense and greatly increasing your cash on cash returns!
Frequently, we provide gap funding for real estate investors by working with numerous hard money lenders to assist them as well as their borrowers do more projects by supplying the “gap” money requirements. This can help you do ALLOT more deals and can be key to your financial success! Gap funding is often used in fix & flips and new home construction loans for home builders.
Power of Leverage
We like to work with borrowers who understand the power of leverage. These borrowers know that they must factor in the cost of money when analyzing their deals. Even though these loans are not cheap, they understand that by leveraging our funding they can do allot more deals, spread their risk of many, many deals and greatly increase their cash on cash returns and ROI goes through the roof!
More deals = more profits!!!
Example: Let say that you typically are required to make a down-payment of $20,000 and that you do 1 deal every 3 months = 4 per year. What if with our programs increase the number of deals to 1 per month = 12 per year. What if with the power of leverage you could do 2-4 per month? WOW your cash on cash returns and your profits both could go through the roof and really Super-Size your business!
We are looking for only well qualified, highly experienced contractor-borrowers, OR borrowers that can show they have a very solid team to complete the projects. If this is you then contact us and lets get started!