Real estate investment is a viable wealth-building tool for savvy investors. Whether new or experienced, you can find funding for your real estate deals using conventional and creative sources. Capitalize on a variety of real estate deals by increasing your knowledge of the possible funding avenues available.
Partners
One way to finance your real estate investment is with an investment partner. Investment partners bring financial or credit resources to the real estate deal so that you qualify for more than you could alone. Profit splits and ownership percentages are subject to the outcome of your negotiation with your partner. If you are working with partners who have more cash and credit than you do, build in adequate incentives to keep them interested in the investment.
Creativity
Creative financing is an option for financing. These options include lease purchases, seller financing and wrap mortgages. A wrap mortgage is when you take over the mortgage payments from a property owner and assume the remaining balance. Creative financing delays your need for a conventional loan and significantly decreases the amount of cash you need to take on the investment.
Line of Credit
Apply for a business line of credit. If you are an established investor with proven success in the field, you have a competitive edge in seeking a line of credit to support your deals. Write a detailed business plan on how you intend to use the funds. Both your business and personal credit history can be a factor in determining your eligibility.
Hard Money
Many hard money lenders will provide funding for investments even if the borrower has bad credit. Higher-than-average interest rates and fees apply when using hard money loans. For example, the national interest rate might be 6 percent, while a hard money interest rate is 15 percent. The incentive for an investor seeking hard money is that he or she knows the investment deal being pursued will quickly turn a profit. This means paying back the hard money loan quickly to avoid the excessive interest rate.
