Housing and real estate investments are starting to show some
small signs of improvement over the last few months, and have been recording
positive feedback even though inflation levels are still.
If you are reading this, you are probably thinking or have decided to
invest in real estate. But, one of the most important question that you should
answer before diving into real estate is: “How do you finance your real estate
investments and what basic tips should you consider?”
In this article we will discuss some basic ways and tips for financing
your investments.
1.
Determine first how far you are willing to go and what
your capabilities are. Do you plan to hold a one-man show and buy a few
properties? Are you willing to collaborate with someone else? This will be the first step of your journey.
2.
Secondly you’ll have to considerate that there are two
types of real estate finance resources: debt-based finance and equity-based
finance each with its own advantages and disadvantages. Debt-based finance is
basically the money you borrow from a third party/creditor with an agreement to
pay it back at a specific interest rate after a specified amount of time (e.g
30 years).Of course the drawback is that if you fail to pay, the creditor has
the right to take control of your property so make sure you have a steady
sources of income and good credit score before borrowing money. This is a very
important criteria set by the financial institution that will lend you money.
3.
The other option as I mentioned above, is Equity based
funding which has gained an increasing popularity in Real Estate due to the
fact that you aren’t obligated to use your own money. Equity based funding is
usually separated into two sub-categories: Privately financed equity which involves the
participation of other venture capitalists such as private investors, business
associates, friends or relatives and Publicly financed equity which is to
create a cooperation and sell shares.
4.
Use a more traditional method such as a home mortgage
company, or credit union. Credit unions are generally a cheaper alternative
because of the free membership, flexibility and lower interest rates than those
of banks.
5.
Hire a mortgage Broker. A good and reliable Mortgage
Broker will be able to research the current ups and downs of the local market
you are willing to invest and find the best and cheapest loan options for you.
The good news is that, you don’t have to pay him/her until the job is done (you
found the cheapest loan), so it’s a win-win situation.
Of course there are other funding resources like seller carry back and lease
option but before you choose a method you’ll have to examine all the possible
gains and risks involved. If you are still not sure, contact a real estate experts like Dean
Crasiozi to help you decide on your next step. Real estate investors like him who have made
their marks in the industry know the ins and outs of this business.
Fortunately, Dean is offering seminars and has written books about how to play
the real estate game wisely. The tips and lessons from his seminars can give
you the advantage over other investors, and hopefully, help you become more
successful.
Check out Dean Graziosi’s
e-Books >>>
