How Your Funding Choices Affect Your Offer

In a separate post we discuss how exit strategies can impact your offer. Also separately, we have itemized at least ten funding options for investment real estate. How you fund a deal can impact your offer. Simply put, the less cash you use, but more you can theoretically offer. Why? Because your Return on Cash will increase and your risk will decrease.

If an Equity Partner fully funds your deal, you have no cash in the project. Your risk is to your credibility and future funding so you want to make sure you provide an excellent return to your partner. But this may allow you to inch up your offer beyond what you might pay with your own cash. The same is true if you borrow the money. Less cash in generally means you can offer more. Keep this in mind as you put together your funding structure and exit strategy for each property.