You’ve decided to turn to real estate investing to grow your wealth. The only problem is, you have no idea where to get the money from to get started. You may have a small lump sum of cash to work with, but it’s not nearly enough to fund your first project.
Before throwing in the towel and missing out on an opportunity of a lifetime, consider these funding solutions listed below to fund your real estate investment deals.
One of the most commonly used financial resources for real estate deals is a traditional home loan or mortgage. You’d simply search for the financial institution you’d prefer to work with and complete a mortgage application.
If approved, you could receive the funds necessary to purchase a property. Keep in mind, however, that traditional banks require most borrowers to have a high credit score, minimal debt, a secure job, and a positive financial history. You may also be required to have a 20% down payment and collateral in case you default on the loan.
Specialized Loan Programs
There are loan programs customized to assist certain groups of homebuyers to purchase a property. These programs provide approved borrowers with advantages like a lower down payment and credit score requirement. Some mortgage programs can even assist you with your down payment or closing costs. Many offers also include a lower interest rate. There are programs for war veterans, first-time homebuyers, low-income families, and more.
Hard Money Loans
Not everyone investing in a property plan on keeping it very long. They intend to generate revenue by purchasing the property at a low rate, fixing it up, and then putting it back on the market to sell at a higher price. Seeing as how these real estate deals are turned over so quickly, applying for a 15 or 30-year mortgage isn’t necessary.
That’s where hard money loans come in. These are short-term loans provided to interested parties in the real estate industry. Using the property as collateral, the hard money lenders in Orange County and other cities across the country offer a faster and less restrictive way of securing the funds you need to purchase real estate.
You can always save a ton of money by splitting the costs of investing in real estate. The more people involved, the lower your out of pocket expenses become. The people you partner with may also have higher credit scores, collateral, or other perks that make securing funds easier.
Though partnering with other investors seems ideal there are some things to remember. When you generate revenue from the property, you will be required to give your partner a portion. This is also true if there isn’t any profit. You two will essentially split the losses. Therefore, you want to make sure that you’re investing with people that you can trust. Drafting a legally binding contract is also recommended.
Sell Some Things
The next financial source for funding your real estate deal may be closer than you think. You have things in your home that could be sold for cash. Start purging each room of your home to collect things you no longer want or need. You can then sell your things online or host a yard sale. If you have items of special value that you’re willing to part ways with like jewelry, silverware, rare coins, or an old car, you can turn these into cash by selling them to private buyers.
If you don’t have any cash saved up for a down payment, have a poor financial history, or don’t accumulate much money from selling things around the house, you may have to wait a few months before getting started in real estate investing. Acquiring a side gig allows you to earn additional funds that can be dedicated to real estate investments. There are a ton of ways to earn money on the side despite your educational background, skillset, or lifestyle.
Breaking into real estate investing can be a great source of monthly income, but it isn’t cheap. This doesn’t, however, have to deter you from pressing on. As you can see from the list above, there are several ways you can get the cash you need to invest in real estate. Review these options, discern which is best for you, and get started.