Borrowing For Your Business Investments

Borrowing Money

Borrowing For Your Business Investments

Equity       for      Liquidity

        When using equity based financing, you’re merely trading equity in your real estate for liquidity.  In doing this, the cost of this liquidity usually ranges from 10% to 18%, and at least with us, you have no prepayment penalty.  Given that, only borrow what you need and have a viable exit strategy.  This is not a long term financing strategy. It is only a short term bridge to refinance or sale your property at a developed price. Good investors stay away from using borrowed money to finance their personal consumption.  Always work to keep the cost of your debt to a minimum, and always tell yourself time is of the essence. 

Keep in Mind the Cost of Money

         The difference between a successful borrower and one who solves crisis by postponement is the amount of time used to move out of a bridge loan.  Always take the time to evaluate the cost, as well as the time frame necessary to complete your project.  Borrowers who pay attention to the cost of bridge loans with a cap in mind, move to extricate as quickly as possible from this type of financing.  Use the money wisely with an end game in mind, and always remember time is of the essence.

Never borrow for personal consumption, and learn to make your investments work for you.  Solving a crisis by deferment is not a strategy, it usually ends with greater problems and less net worth.  And always less time.

-Nathaniel Fulford V

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