Feb 05

How do you plan to finance your real estate investment business?- Rich Investor series

Beginning real estate investors will almost always need some financial boost for their initial investment. As a matter of fact, sometimes even seasoned investors who can afford to pay cash for their investment will often opt to secure financing instead of using their cash reserves. This is often seen as a safer way of cushioning liquid cash in the event that things don’t work out well. So where do you get financing for your real estate investment business?


For starters, you can always check out your local bank where you have a saving or checking account. More often than not, the good business between you two can lead to better terms than starting out afresh with a new institution. But what happens if the bank does not offer such kind of loans? No doubt they can always refer you to another institution.


Be advised that most real estate investment loan products would need you to place a minimum of 20% down payment and will often come with a higher rate of interest than loan products for owner-occupied homes. Needless to mention, such terms can be hard for new investors to handle, particularly if they are yet to generate a stable flow of cash from their investments. The good news is that there are alternatives to work around the issue and come out as a rich investor in the long run.


For starters, you can always seek referral from family and friends. If you know of someone who has worked with a loan officer or lending institution and made the loan process less of a hustle, you can always ask for their contacts and get started with them.


The options at your disposal

The type of loan product you can get will be pegged on several factors including the type of property you wish to invest in. is it a multifamily dwelling, a house, commercial real estate or land. You should know by now that different properties will qualify for different kinds of financing. Another determinant is your credit history, which will have a huge impact on the rates of the loan you plan to take.


Savings banks and other savings associations have for a long time now been specializing in home mortgages. Commercial lending institutions sometimes prefer to fund short-term construction projects which are then paid off with another lump sum amount once the project is complete.


Another option is from credit unions which have become very popular with mortgage loans. Federal and state laws that control and govern most banking activities are not applicable to credit unions, hence their large popularity. Further, this has made the loans very flexible and can be customized to meet an investor’s needs.


When you apply for a real estate investment loan at a savings and loan association, credit union, bank, or any other lending institution, you will have to work with a loan officer who will evaluate your financial details so as to determine your creditworthiness and know the type of loan product that is customized to your needs. Such a person will always be a good point of contact as you start to acquire properties and kick start your journey to becoming a rich real estate investor.

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