Unless you have an impeccable credit score, it is difficult to purchase an investment property using financing. Getting into real estate investment for the first time can be more than challenging, it can be down right impossible.
In this article, I take a look at 5 ways to finance a real estate investment. Don't forget to click the "continue reading" button to view the final two methods to get financing in today's economy.
1. Traditional Financing
When you hear about people using traditional means to handle the financing, they mean organizations like banks, credit unions, and other financial strongholds. The subprime housing crisis has forced lenders to deny a great many applications for financing and the future of the subprime housing market still looks grim. Without a 680 credit score or higher, you can expect your application to be denied. There are also more stringent terms and conditions in place as far as documentation goes. Now you have to provide legitimate proof of income as well as any debts.
If you are fortunate enough to be approved, you can expect a 10% down payment requirement on any property you are looking to purchase. You may be able to fair even better and find a lower rate. Either way, now is a great time to purchase homes, providing you are financially stable enough.
2. Seller Carry Back Financing
Here is a method of financing that you may not have heard of before. Creative financing, or "on term" financing is one of the alternative and less well known methods of attaining investment purchase financing. In this method of action, the seller agrees to carry the note for the buyer. The seller will always have to own the property 100%, with no debt attached. The seller has no interest in the property any longer, but they would still like to pull a profit from it. The average time frame for payback to the seller, from the buyer, is around 1-5 years. The buyer will have to refinance at some point down the road, but that's a good thing. Attaining a refinancing loan is much easier than a full on purchase loan.
3. Lease Option Financing
This is a great option for people without a lot of financial backing. This is usually a last resort for people without a lot of financial resources. After a few years, usually only two or three, you are given the option to purchase the property. Every month, a portion of your payment can go towards the actual purchase of the home. You'll have to arrange this but it can be done.
>>Continue Reading the final 2 methods
Jason Hartman
www.JasonHartman.com
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