Zero Risk Real Estate: Creating Wealth Through Tax Liens and Tax Deeds

Using Traditional Funding

Your new tax property acquisitions have value, and sometimes they have great value. You’ve put in the research, followed the process, and invested time and money. One strategy is to then leverage out your property using traditional funding sources.

Traditional funding is recommended if you are planning on holding onto your real estate properties over a long period of time, say five years or more. While the rules have certainly changed on the types of terms you can get when using traditional financing from banks and other financial institutions, you still might want to jump through the hoops when you want to get your initial investment dollars back out.

Traditional financing means you must meet the lender’s guidelines, which are much stricter than obtaining money from private money or hard money lenders. Financial institutions must follow federal and state lending laws, provide disclosures, and do not have the flexibility that private lenders have in making lending decisions. These lenders are more interested in your creditworthiness and your debt-to-income ratio when they are considering lending you money, as well as in the current market value of the property.

Since the property serves as collateral for the loan, if you default, they want to know that they can recoup most or all of their money from foreclosing on the property or going after your other assets for any deficiencies. Of course, there is no way for anyone to predict whether property values ...