Real Estate Investor Financing: Is There Such a Thing?

If you are reading this article, my guess is you’re in the real estate investing business or you’re thinking of getting started in the business. And like any other businesses – funding is the lifeblood of a fix and flip business. Real estate investor financing can help you overcome the deadly and more often than not, common problem that cripples most business operations – lack of adequate start up capital and lack of cash flow

In real estate, there are typically two types of loans – the conventional loan – the one you get from the bank or credit union to buy your live-in house. The other type of loan is the investor loan, which is not so main stream because it is usually for people who are in the investing business.

Investors have a couple of options when it comes financing their deals. they can go out and get what are called Private Money loans. These are funds you can borrow from private lenders to fund and fix your properties. Typical lenders for this type of real estate investor financing include family members, friends, other investors and everyday people with deep pockets. These are individuals who have money in their bank accounts, retirement funds or some other liquid asset which they realize is not earning a good return.

if you can demonstrate and convince these individuals that putting their money in a piece of property is a better option for them, they will help you overcome that all too common investor ‘financing problem’ faced by many aspiring investors. They can fund your deals without you ever walking into a traditional bank.

Real estate investor financing is referred to by different terms depending on the lender. If you’re working with a professional investing outfit, they might call it a hard money loan or an equity loan. the concept is the same – you get funded depending on the amount of equity you have in the deal. And because it’s a short term loan and it is such a convenient form of financing, the interest rates are usually higher than conventional real estate loans.

The other main difference between a conventional loan and investor financing loans is the qualification criteria and lending guidelines. With a conventional loan, you have to have good credit and you have to be able to show proof of income. Your interest rate on a conventional loan is relatively lower and you can pay back the loan over a longer period of time

With investor financing loans, your credit is usually not an issue. You don’t necessarily have to show proof of employment because it’s understood that you’re in the real estate investing business.In addition, real estate investor financing loans are typically made for less than one year and you get approved based on the equity in your deal.

At the end of the day, investor financing loans are worth having if you want to take your business to the next level. They are convenient, they allow you to buy properties and profit fast. You definitely must have them in your real estate investing toolkit.

Loan Against Property: An Overview

In today’s competitive world, you need money for everything from funding your own business to paying for the education of your children. One of the first thoughts to come to one’s mind is, “Where do I get the money from?” Today, there are several ways in which a person can source money but one of the easiest ways is to take up a loan. One such loan that is available to people today is the ‘loan against property’.

The first thing to do would be to understand what a ‘loan against property’ is. A ‘loan against property’ in simple language is a loan which is disbursed or sanctioned against the mortgage of one’s property. The property which is being mortgaged by one can be any property which is occupied by the person or rented out to someone for use. The property can be both in the form of a flat or in the form of a piece of land.

Banks will specify different eligibility criteria for one to be able to take up such a loan. Some of the criteria include a study to ensure that a person’s finances are of sound nature. The bank undertakes a study as to how much you earn, how your savings are, as well as the debts you have. A check will also be done to make sure that you have cleared all previous loans and that you have a clean record when it comes to making credit card payments.

The ‘loan against property’ can be very helpful as it can be used for a varied range of purposes. The value of the property being mortgaged by you will also be gauged minutely by the bank before sanctioning a loan on the same. A ‘loan against property’ is considered to be a secured loan because the borrower of money provides the bank with a guarantee where the property is kept in the form of security. This loan can usually be taken for a period of 15 years. Usually, the rate of interest on such a loan is between 12-15%

Some people may ask if there is a difference between this loan and a personal loan. The answer is, “Yes, there is a difference between the two types of loans.” The personal loan falls under the category of being an unsecured loan as the borrower does not provide the bank with any kind of security at the time of taking the loan. The rate of interest charged on a personal loan is higher as compared to the interest charged on a loan against property.

Also, a personal loan can be taken only for a period of 5 years. The ‘loan against property’ is one of the best ways of sourcing money. However, one main disadvantage is that the bank will take hold of the property mortgaged in case the borrower is unable to repay the loan. A person should only take up such a loan if he is sure that he will be able to repay the same in due time.

Tips for Getting Home Financing

There are many home finance solutions for people who want to buy a home. With all the various options for financing and loans, it is possible to get the house you’ve always dreamed of owning. The recent financial crisis has taught us to be a little more careful with our finances, which is why it is important for us to study our options thoroughly and carefully and make sure that we are in a position that enables us to pay for our housing loans and other expenses that come with buying a home. It is important that we don’t jump the gun to make sure that we won’t have any home finance problems in the future that may lead to a lot of debt and foreclosure.

The first step in buying a home is getting a loan. This is where home finance can get tricky. Just because you are able to meet the lender’s screening criteria, it doesn’t mean you’re automatically qualified for the loan. Banks and other lenders tend to award loans to people to show that they have the ability to repay the loan and that they are not overloaded with other debts and expenses to pay for. This is why we must create a balance sheet and compare our income with the expenses we incur every month. The information we can get from this is beneficial not only to the lenders, but to loan applicants as well because it shows us if we can handle the financial burden or if it will bury us deeper in debt.

If you think your credit scores and income statements can get you the loan you need, you can now start applying for financing. A lot of people look for a house before meeting with a lender’s loan officer and end up getting disappointed when they don’t get approved or they are offered an amount smaller than what they need to buy the house they chose. One way to avoid disappointment is to get a pre-approved loan. Before house hunting, meet with a loan officer and apply for pre-approval. If the lender believes you are qualified for the loan, you are given a letter of pre-approval which gives you an idea of how much you will be getting from the loan and you can now start looking for a house that you can afford.

Buying a new house is a decision we shouldn’t take lightly. It requires a lot of financial planning to make sure that you get your dream house without drowning in home finance debts.