There are various myths encompassing property investments and one of the most heard among those is only wealthy individuals can invest in real estate. But in reality, you now have various financing options available including savings, mortgage loans, lines of credit, private money etc that can let anyone make such investments. Fruitful property investments encompass solid personal strategies which are not haphazard, random or uninformed. Here, we’ve jotted down some highly useful financing options to help people who want to become fast house buyers.
- Savings: This is hard-earned money you put aside and keep in a safe place. Most importantly, this money can be accessed very quickly when you need it and be invested instantaneously with minimum delay. It makes sense to keep hold of a robust savings amount to invest in real estate.
- Mortgage loans: This is one of the most preferred ways for most property investors. Majority of the conventional mortgage loans require a minimum of 20% down payment but it can extend to 25-30% for property investment depending on the lender. These loans generally come with lowest interest rates. Additionally, if you can make higher down payment, you may become eligible for even better interest rate.
- Lines of credit: This is another widely used option that investors planning to become fast home buyers choose to finance their investment property purchase. Banks and other financial institutions offer different products including line of credit that empowers you to tap into your own equity. For instance, you can purchase a property but rather than going through the general hassles of finding finance, you can take out a line of credit on your own house to pay for it. Remember that you must have equity in your house to obtain a line of credit. Banks usually lend up to a specific percentage of the total value of your home. Though this percentage varies between lenders but finding a financial institution that offers as much as 90% of your home’s value won’t be that much difficult either.
- Private money: Though private money is much similar to hard money, the main difference lies in the relationship between the borrower and the lender. Unlike hard money that comes from professional lenders, private money is offered by individuals looking for higher ROI. Private money lenders provide money to purchase property in lieu of specific interest rates. Here, a promissory note is used to ensure the security of the lender’s investment. In case you don’t pay, they may foreclose and take the ownership of the property.
As we’ve discussed, there are different ways to arrange funds to perform more deals and become fast house buyers. However, since every deal differs from the other, it makes sense to have a solid understanding of various funding options to move ahead.