So, I get lots of questions about funding. But someone asked me a question recently that actually doesn’t get discussed so often, and I think it’ll make a great lesson.
Hey Moguls, Patrick Riddle here to help you figure out whether it’s a good idea or not to borrow against a property that’s owned free and clear. The reason someone would ask this is because they’re thinking this might be a good avenue to access cash for funding their real estate investing deals.
So, I’ve given this idea some thought, as has my good buddy and fellow investor, JP Moses. Here’s what we’ve come up with…
First of all, if you’ve got a property that’s free and clear, you’re in a great position! Not many people have that. It gives you potential leverage to bring in money.
But my question is this: What specifically would you be borrowing capital for? If it’s for additional deals that you’re doing, I would suggest keeping the free and clear property…
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.