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If you are someone interested or looking to grow your financial status either while at an early age or perhaps already in your later years, you should know that investing in commercial property lending services can give you the benefits you never knew you could reap. Truth be told, unless you knew these benefits, you probably wouldn’t even consider investing or loaning for your investment. It’s best that the facts will be laid out in front of you in order for you to realize the potential of improving your wealth through commercial property investment. Here are some of the best benefits of investing in commercial property lending services that you can experience and the appropriate loans that you can apply for:
1. Return on Investment is higher.
With the right investment property, a greater return on investment can be achieved in investing in commercial real estate as opposed to residential ones. With a 6-12% average ROI in general, commercial properties definitely surpass that of the 1-4% ROI of residential properties. With that in mind, money will not be an issue especially when you engage in property lending services. There’s always a multi-family apartment loan to help you get started. There are services that offer competitive rates on such loans.
2. Asset Value appreciates overtime.
Getting a loan in order to pursue investing in a commercial property will have you reap the benefits of the appreciation of its asset value. And take note, its appreciation goes beyond other investment types. Such properties increase in value enables a cost-effective development which in turn enhances the usability and desirability of the asset, not to mention the imbalances of supply and demand. One can always call on a commercial real estate loan provider in order to achieve that. Due to real estate’s flexibility, you can invest either in multiple places but doing so in one place is definitely cost-saving.
3. Tax Benefits are commendable.
It is best to understand the tax benefits of investing in commercial real estate in order to fully enjoy the greater portion of your income flow. A few and most common of these tax benefits include mortgage interest and depreciation deduction, and the 1031 exchange. Deductions in mortgage interest will be coming from your taxable income. Despite the fact that depreciation sounds more of a negative thing than positive, it will do you well to know that it doesn’t mean having a loss in value but more like a “non-cash” expense. The last tax benefit, which is the 1031 exchange, may perhaps be the biggest and most significant benefit in investing in real estate. When you complete an exchange, the depreciation recapture taxes and capital gains taxes that are due will be deferred. There are few more other tax benefits and it would be wise to consult a tax advisor regarding these. Again, there are many different and efficient types of loan to invest with just the right amount to begin your venture.
4. Long leasing period.
It is a fact widely known that investing in real estate means looking far into the future of reaping harvests. However, one of the benefits of it is that commercial properties have a long leasing period that can even extend to at least 10 more years
So many people have been investing in commercial real estate due to these appealing benefits that they come in package with. All you need to have is the right capital. Even when it comes to investing in residential properties, there’s what we call a residential refinance loan which allows lowering the monthly mortgage payment and increasing the rental income. But then again, investing in commercial properties has been the buzz for the last decade or so. Whatever investment it maybe – be it residential or commercial – there’s always a perfect opportunity to improve your wealth and help you achieve the benefits mentioned.
There has been a myth that has held a lot of people back for many years when it comes to investing.
We get it. You see it as a risk but have you looked at the other side of doubling or maybe even tripling what you have and turning them into much more? There are so many easy options for you to try. Here are some easy tips on how to engage in inexpensive investments.
1. Invest in Real Estate
We know what you’re thinking. Real estate? Really? But hold that thought right there and put it right under a rug. When people tell you to invest in real estate, you immediately think of a pile of money, right? Well, that’s where you’re wrong. If you haven’t done it before, you need to figure out how to finance your first real estate investment. And you’ll realize you don’t need wads of cash to do it. That is why real estate is the best way to make money according to people who have tried, tested, and reaped its benefits. In all honesty, you’ve got to have the right hustle and bustle in the investment world in order to make up for what money you got.
2. Invest in Private Money
You’ve probably never heard about this before but Private Money Trust Deed Investing is real and it’s one of the best ways to invest your money. Private Money Investing or PMI is when you invest a private, an individual, or several individual’s personal money in real estate or real estate mortgages. PMI is more describing the source of the funds lent to the borrowers, as well other considerations from the investor’s side. This type lending fills a need in financing that is more lenient on the qualifying, more diverse and acceptable to more complex transactions than traditional institutional bank type funding. There are also what is commonly referred to as “pools” investment funding which are comprised of many investors taking a smaller portion of a mortgage. If you want to learn more about that, you can read about Private Money Investing here.
3. Invest in a Rental Business
The first thing that you should know about a rental business is that you have to do it smart. You need to study your market, who and what kind of people would need your rental service; what kind of equipments will you have rented out. You need to find the best deals for these equipments, say housing or apartments, and get your paper works in order. Finding the right tools for your rental business and fulfilling your duties as the owner can help you keep track of your cash flow. Having a rental business is one of the best ways to keep your money flowing over time. Just put your money down and all you have to do is to maintain and receive the fruit of your sweet labor. Remember that in investing, whether you start big or small, the profit always has a singular direction – increasing, that is – with the right attitude and motivation in everything that you do.
4. Invest in your Cash Savings
Have you ever thought about saving? If you’ve never thought about it, investing in your savings will serve you well in life. You may not see its usefulness when you begin, but give it a good amount of time and when you need it the most, you’ll have yourself to thank for having been able to save. The money you invest now, you get to enjoy later.
5. Invest in your Own Skills
People sometimes get so overwhelmed thinking of matters where they can invest or earn more money without even looking right at themselves. The moment you realize you yourself are an investment, you’ll never perceive things in your life the same way ever again. Think of the skills you have that you can improve. Have you ever thought about attending some seminars or conference which will help you attain the next level in your career? They may sound tiring and seems like too much effort on your part but think about this, success never comes easy. Taking courses to learn new skills or improve the one you already have will only take you a few hundred dollars to invest. And just like any investment, you’ll reap your harvest later.
6. Invest in your Retirement Plan
If you’re already retired, well you might have probably read this article a little too late. But if your age hasn’t surpassed the numbers of the calendar yet, investing for your retirement plan will be a very good idea. People usually go for either a traditional IRA or a Roth IRA in setting up their own retirement plan.
7. Invest in Partnerships
Some journeys you don’t have to walk alone, just like in investing. Sometimes you got to go out there and find the partners worthy of helping you finance a deal especially when it’s a little way over your price range. From that partnership, you can form a team and deal with how the deal is going to be. In the end, all parties will reap profits and benefits in the end. All of you can pitch in something for the team, even with what little you have, but when put together can make a huge difference. The most important thing is to build partnership only with the people you trust the most.
These are just some of the easiest ways for you to invest the money you are entrusted with. Instead of spending it needlessly, take it to a place where it can grow and multiply. That’s how you know that big things actually start from small and humble beginnings. Stop thinking about the myth and start busting it.
Investing, basically, comes in many forms. People invest in time, energy, and most commonly, money.
Surely they want to be sure that what they work hard for will also work hard in itself when invested. There are also various levels in investing.
Some people take a dip and some really take the dive. Besides, if you’re going to go skydiving at a higher feet, wouldn’t you bring a parachute that can endure the pressure and wind upon falling? If you expect to skydive at a hundred meters from the ground with a parachute with a lot of holes in it, you know where you’re heading.
Likewise in investing, if you expect bigger returns, you have to be willing to take the bigger risk, intelligently of course. And what better way to take on investing than in real estate?
Empirical evidence shows that this type of investment can help you generate income continually overtime and it’s generally one of the greatest investment option out there.
Private money investing, becoming a private lender, possible real estate projects for funding, venture capital funding, weighing the advantages of private venture investing for real estate and more – these are just some of the topics that we are going to cover here.
If you’re ready to learn, read on.
What is Private Money Investing?
When a private individual, or several individuals invest their personal money in real estate or real estate mortgages, that’s what we call Private money investing.
Private venture investing focuses more on the source of the funds that is lent to the borrowers with, of course, a few considerations from the investor’s side; your side.
It may sound a bit similar to hard money lending, however it would require easier qualifying and higher than normal rate and fees than the usual lending guidelines.
Since it’s private real estate funding, it would be possible that there are more than one person or groups of people who can invest their money together.
How to Become a Private Lender?
Now that you know what Private Mortgage Investing is, you might be thinking about how to become a private investor.
Think about this; owning real estate will enable you to reap benefits from the business, however, is there a possible way to earn similar profits without having to own one?
Yes, there absolutely is and that’s by becoming a private lender. If you’re not aware, real estate investors are profiting significantly high with the current strong housing marketing. It would be a wise move to engage in this business as a private lender. Aside from that, the regulations on loan origination has become over stringent nowadays which makes private mortgage investing a great market to plunge in.
This market has created extra borrowers who will now seek alternative financing for their real estate investments and purchases.
Aside from housing, there are some private investor looking for highly profitable projects that would be possible for funding such as apartments, hotels, commercial buildings and more. These are just some of the projects wherein you can ask for subsidy.
Whatever financial assistance the borrowers need the money for, private lenders will be an open source for them to go to.
Advantages of Private Venture Investing for Real Estate
One of the most alluring factors why there are private investors looking to invest is that you don’t have to undergo twice as much trouble as investing in a real estate but getting possibly the exact income, or even more, out of it.
That means no physical visit to the estate, no dealing with a lot of stressful details before acquiring profit, just pure lending of money through private lending brokers and receiving their bigger rates with the lowest possible risk.
Financing Options for Raw Land Development
One of the greatest investments today with the growing economy is developing raw land. Financing for this process is slowly coming back into the market. From forming a plan to buying the land and going through the entitlement process is somewhat time consuming and costly. But the benefits when everything gets completed is normally many times compounded once entitled and permits in hand.
If you’ve already made plans, consider your budget next. There are various financial concerns when buying raw land. Make sure your money is ready to face all these. You need to prepare for the due diligence, down payment, conversion, and carrying costs. If you think all these are heavy to handle and makes you want to back out of your dream, fear not, you can take a loan to cover your budget. This type of loan are called land purchase and entitlement loans.
Never heard of this before? Well, this is a type of loan which covers a percent of the acquisition & sometimes all the soft costs when you purchase and proceed to have entitlement on raw land. The greatest thing is that if you’re a strong borrower, you’re in luck because you will surely have the best rates and terms. To avoid confusion, the land entitlement process only covers the process of plans, engineering, survey, etc. for land and permit to allow you to build on the land you purchased. It’s not about funding the development part of the process. With a land loan in California, you can surely enjoy the process of buying your very own raw land and seeing your development dreams come true.
Finding the Ideal Land
After you have dealt with your budget, next comes the search for the perfect land. Remember to go for the one which hits your price range and meets your requirements. You can hire a professional to help you locate just the right parcel. Or maybe you’ve already found the right one.
When you have finally found the land that you’ve been looking for, make sure that these concerns are properly achieved. One, there should be access to sewage and water. Second, make sure the property has access to a road so that it would not be too difficult to go around places when you need to. Third, know the environmental restrictions around the area. For example, if you’re planning to build a farm, you have to make sure that your land is in an agricultural development zone. Fourth, ask questions of the seller, sellers agent, your agent, and all municipalities from city to federal that may have jurisdiction over the location your in. No matter how little or big, silly or serious it may sound, better ask upfront, rather than regret later. Fifth and last, go and see the raw land yourself.
Purchasing the Land
This is where land purchase funding becomes really useful. For owners who are a little tight on cash, there’s no reason to fret. iFundre.net has a special program which allows funding up to 60-65% of future value and up to 100% loan to costs when your land is off to become a great project and is located in a progressive metro area with strong market demand. Of course there are a few risks that you need to be ready from that’s why you need to have a sure exit strategy. In line to that, you definitely need to have a lawyer &/or professional brokerage when you conduct such a transaction, just to be safe. Having a lawyer or agent/broker on your side can assist you in making sure that the transaction between you and the seller is fair.
Do your Due Diligence
This part of the process of buying raw land usually takes a longer time than planning what to do with the land. Basically what you should do is to inspect and have a feasibility study. This process can be expensive so you can request the seller to pay at least their part of the due diligence. After that, you should choose to hire your own surveyor or civil engineer just to know about the soil, the topography, the potential value as well as the where and the how of building your project. You can also visit the county offices of Building and of Planning and Zoning, Health Department, utility companies, and Department of Environmental Protection to ask more specific details about the land you purchased and its surroundings. After completing your due diligence and seeing that everything is as smooth as it should be, you are now ready to close on the property. You should have a land contract, the deed, and a closing statement to complete the purchase, and always use a title company or closing attorney in your area.
These are just an overview guide in buying your own raw land. Do more research and planning. Read more materials and ask advice from professionals or from people who have successfully accomplished this before. But remember, don’t let your lack of funds stop you from building your dreams, because there’s always iFundre.net to back you up.
How to Succeed In Commercial Real Estate Investment
One of the assets that can glorify your portfolio to a new level is by getting the right commercial real estate investment. You need to consider a lot of important factors in order to evaluate the viability of commercial real estate investments. Investors should really consider this type of investment as a crucial exit strategy. The fact that such investment represents a great way to gain wealth makes it advantageous over residential investments. It offers higher income potential, steady cash flow, more attractive leasing contracts and lower vacancy risks. However, you must also be aware of the obstacles that would come along your way when investing. These undertakings, on the other hand, are completely avoidable if you get to understand the twist and turns of how the deals work.
Real estate investors in Bay Area California should know that commercial investments rely mainly on purchased properties that are being used solely for business purposes. The space could also be leased in order to collect rent from the businesses that occupy the rented space. You may know these properties as retail, industrial and apartment buildings, warehouses, and office.
Investing in commercial real estate, more so succeeding in it, requires following these steps:
1. Think like a professional.
In order to succeed in commercial real estate, you need to learn what the insiders know. You have to act and think like a professional, and see the investing world in that perspective. There are important things that you need to be aware of in order to have a greater chance of succeeding. You need to know the difference in value when it comes to commercial real estate and residential property, and in what ways you’ll get greater cash flow. If you’re in a tight financial environment, there’s still a way for you to invest in real estate even with bad credit. However, lenders would prefer for you to show some money before giving you a green light for the loan.
2. Plan everything beforehand.
A wise man will never go to battle unprepared. Likewise, a wise real estate investor like you should never engage in any deals without knowing first what you’re up against. The top priority when it comes to landing the perfect commercial real estate deal is to set parameters. You have to be aware of how much you can afford to pay and take a look around for mortgages so you will be able to estimate how much you will pay over the life of the mortgage. You can ask a mortgage broker to help you understand more of these things.
3. Know a good deal when you see one.
Not all opportunities that present themselves to you are good and eventful. You need to learn how to recognize a good deal so you won’t fall into the bottomless pit of despair and regret. Always know that the best deals are those that you know you will be able to walk away from. An exit strategy is a must in order to know a good deal. As a commercial real estate investor, you must have a sharp eye to notice damages that needs to be repaired and the risks that you need to assess in order to ensure that the property you land meets your financial goals and expectations. If it’s your first time financing your real estate investment, you must know the dos and don’ts in order to survive.
4. Be adaptable when searching for great deals.
You can use a three-pronged approach in this case to evaluate properties. One way to evaluate a commercial property is to study the neighborhood where it is located by going to open houses, talking to other owners, and looking for vacancies. This is what investors call the fine art of neighborhood “farming.” Another way of searching for great properties is through the internet, classified ads, or hiring a bird dog to help you in finding investment leads.
5. Acknowledge local market conditions.
It’s very important that you are aware of the local market conditions. In order for you to do that, you need the market and the property in order to evaluate a real estate investment. Out of these two levels of due diligence, local market conditions weighs more. Remember that a great property placed in a bad market is a disaster. A poor property in a great market can be an oasis in the middle of a desert. You need to analyze the demographic trends of population growth, income, and employment in the local market in order to know where the opportunity lies, and where it doesn’t. These areas will decide whether or not your investment will succeed.
6. Have adequate knowledge on due diligence.
Investing in something you don’t fully understand is like walking in a dark room without a light. You might fall a couple of times and it will be quite difficult to stand back up. The second level of due diligence is the property condition. This includes physical items like building systems, structural components, and environmental matters. However, intangible matters such as title, survey, and zoning and land-use regulations are equally important. You also have to know about contract law, insurance, finance, accounting, and tax law in order to do things right and avoid entanglements halfway through the investment. It’s important to ask help from professionals if you’ve never dealt with such matters before. Paying for professional to do the job is cheaper than paying for the loss that you might experience in the end.
7. Do the math.
Commercial real estate investing sure isn’t rocket science, but it definitely deals with numbers you have to solve. There are calculations that you must do and operate that’s why it’s crucial that you get the real operating numbers and not just the projection of potential gross income and estimated expenses. You also have to consider the risk that increases for every assumption that you make. Never think that you can save expenses by cutting corners, like raising the rents after you possess the property. You need to make the numbers work in order to gain numbers.
8. Have enough leverage.
In the world of real estate investing, highly leveraged deals occur but it can be disastrous when it is not backed up by a solid plan partnered with a sufficient capital. You have to know that borrowing too much money in this business can be devastating. Unless you want to know how to become a private money investor, you need to make use of leverage properly. This is a function of deal structure and investment strategy, knowing that every commercial investment property must be evaluated in the light of the break-even ratio. Calculating the break-even ratio helps you in determining if you’re walking through a dangerous territory or not.
9. Prepare multiple exit strategies.
Having prepared a lot of safety nets in case you wall will make you numb of the impact. You won’t ever feel the damage of landing from the fall. You need to have a realistic plan that will maximize the value of the property in the shortest time possible with the least possible downside. Having more than three exit strategies can get you out of the danger zone after a terrible fall. You need to learn how to get your money out of a deal when necessary so you won’t run out of money.
Success, as they say, is a flight of stairs, not an elevator. You need to go through certain stages in order to learn and grow and finally ace your commercial real estate investment. There might be difficulties and a bit of bumps along the road, but know that the land of milk and honey awaits you. These steps are but your guide in succeeding. The most effective step is your determination and drive to really succeed. The first step is always the most difficult part, but as you go along the process, you’ll realize it gets easier.
How to Sell Your Rental or Rehab Property Fast
Why you need to sell faster:
Time is money. There’s no circumstance where that statement is truer than in the field of real estate investment. Every day that your property sits on the market, you’re losing bundles of money. Holding costs, security and liability risk, rising interest rates, and looming market crashes put your equity at risk. Here we’ll share some valuable guidance to improve the return from the resale of your investment property.
Setting Your Investment Selling Goals
Before you get started, it’s important to keep in mind some predefined goals that will direct your efforts and allow you to be more realistic and effective in selling your investment property.
Get yourself into a successful selling mindset by being objective and looking at the property from the buyer’s point of view. Think about what will be important to your ideal buyer. What will they be looking for, and scrutinizing, as they evaluate your property? As you’re getting ready, keep in mind the three primary goals:
- Get the most for your property when it sells.
- Sell it with the least days on market.
- Avoid selling headaches and risk.
Find an Investor’s Real Estate Agent
Real estate professionals can make your life much easier, and net you more for your property. Local expert real estate agents know your market, what the property will likely sell for, and what appeals to regional buyers. They can help you avoid over or under-improving your property (both will lose you money). Ask for referrals from others in the investment community.
You’ll want to work with an agent that understands the needs of investors, and is capable in determining the value of your property by the market comparison and income approaches to valuation.
Selling it yourself as a ‘for sale by owner’ or ‘FSBO’ might seem like an appealing choice to avoid paying a listing agent commission; however, for sale by owner properties typically end up selling for less and spending much longer periods of time on the market (increasing your holding and financing costs).
Preparing Your Investment Property to Sell
If you want to net the most from selling your rental or rehab property, it’s an excellent idea to clean and declutter, select a neutral color scheme, get an inspection, make needed repairs, and stage the property. Taking these steps will tremendously increase the appeal of the property, and eliminate the objections that will more than likely be raised at a critical point in escrow.
Picking the Right Season to Sell Your Investment Property
The best time of year to sell your property is in the spring and summer months. During these times there is the greatest demand from buyers looking to make their first buy, relocate, or move-up. Take advantage of the fall and winter seasons to ensure that the property is ready for all weather conditions. During this time, you can make updates to the interior, complete repairs, and inform your renters, if any, of your intent to sell (a courtesy, but not required).
Pricing Your Rental or Rehab Property to Sell Fast
Choosing the right price for your property can be accomplished by understanding the list vs sales price ratio, the impact of utility costs on local values, demand for properties with similar features, and factoring in association fees and tax assessments. Play it safe by giving more weight in your valuation to sold properties, rather than those that are currently on the market. Active listings tend to have highly exaggerated list prices that do not give an accurate idea of the actual value of your investment property.
Marketing Your Investment Property for a Quick Sale
Get it sold quickly by increasing your market exposure. If your price is a little high, you might still have a chance at selling it with an effective marketing strategy. If your price is in the pocket, you’ll have it sold in a minute with a solid marketing approach. Your first decision is to hire an agent or sell it yourself. When you work with an agent, you have the advantage of their experience, market knowledge, and network connections. Brokers and agents know and represent most buyers in the marketplace.
Either way, ensure that your property is published online as broadly as possible and that the highest-quality photos, video, and virtual tour represent it. Make sure your marketing materials are mobile friendly and optimized for view on smaller devices.
Negotiate to Get the Most in Selling Your Rental or Rehab
Don’t leave money on the table by showing weakness in negotiations. Select a tough agent or plan on what range of terms you will accept. Calculate how much you’ll net when the property closes. Insist that your buyer is pre-qualified, shows proof of funds, and offers a sufficient deposit and down payment to demonstrate their commitment and minimize the risk of an escrow cancellation.
Speed is Everything
Selling an investment property is supposed to be an impartial and objective process that results in a straight forward sale and the highest price. That’s seldom the case as we get emotionally charged with the excitement of selling and negotiations.
It can be an enjoyable process, that when strategically planned, can offer you a satisfying selling experience and the highest offers for your investment property. Stay focused and remember: time is money.
One fact that is not known to a lot of people who invest is this: becoming a private investor is one way of reaping the benefits from real estate business. The fact that the housing market is increasingly getting stronger, which enables real estate investors to have significant profit, makes it a wise decision to become a private lender.
The extreme swing of regulations on loan origination from way too lenient to now over stringent is also another reason for private investors to venture in such investments. Now that these reasons have caught your attention, you might be interested in private money investing.
To help you prepare, here are the things you need to know about becoming a private investor.
1. Private investments can potentially help improve your portfolio’s overall health.
Such investments represent assets which can be much less correlated than other assets in your portfolio because they depict whole new classes of securities for most investors. This means that their value may not move in the same direction, time, and amount as your portfolio. Due to that particular reason, when you include private investments as part of a well-diversified mix of holdings, it’s actually possible that the overall volatility of your portfolio will decrease while its expected return will increase.
2. Technology makes private investing easier and more transparent.
Due to the advent of technology, almost everything is possible. Even private money investing becomes as easy as clicking buttons because the online brokerage technology has become the norm in public securities trading, which in turn basically changed individual investing. Engaging in online brokerages lets you have an easy access and transparency to the deals and documents compared to the traditional system.
3. Seeking out well-connected people can be a good help.
It’s not necessary that you are linked to tons of people; what matters is that you need to know the inside track to the right deal, and you only need to connect to a few people; just be sure that those few are great in what they do. If you don’t have someone to confide when it comes to the perfect deals, you won’t be able to know the investment opportunities lingering out there in the open.
4. Private Investors are basically the spine of real estate finance.
Private lenders are treated such because they help business move through providing finances to people in order to acquire properties. When you become a private investor, it’s safe to say that a lot of people are actually counting on your money. You’re actually hitting two birds with one stone; you’re reaping benefits from your real estate investment while helping other people.
5. Private lenders are free from the burden of physically investing in real estate.
Unlike people who fix and flip homes, private investors don’t have to deal with tons of details before acquiring profit when they’re successful. They only have to lend their money through private lending companies, like iFundre.net, while they receive their big rate of return with lower risk.
6. Private money investors are protected by private lending institutions.
If you want to become a private lender but you’re not so sure about securities involving your money, you need to know that as you become a private lender, your endeavor will be protected. Private lending companies like iFundre.net partners with institutions that protects your investments in case some issues will arise with the borrowers or their property.
7. There are different types of private investments.
This goes to show that not all private investments are the same. There are some equity, debt, and other types of securities. They can be in startup companies with a great potential for growth in the years ahead of them. They are also in companies looking for capital in order to expand their business. The key is to choose the type of investment that has the potential to be a valuable component to your portfolio.
8. Reviewing the borrower’s capacity to pay monthly is a must.
As you become a private investor, remember that it’s very important to know if the borrower is able to make monthly payments. Otherwise, it wouldn’t be good for you or your investment. Although private money loans are often made based on the asset, or collateral, the fact remains that the best loans are able to give equal weight to the borrower’s past credit track record.
9. Secure enough liquid assets to cover the investment and any debts that may result.
It’s very crucial to calculate your net wealth. A lot of nonprofits usually seek investors who have enough assets in order to cover the needs of the project. This will serve as your cash cushion just in case something goes wrong. In that way, you will be prepared to face the worst thing that will happen.
10. Contact your mortgage broker about private investment.
When you invest privately, there are mutual funds that are created out of venture capital securities, which is basically a more disconnected way of becoming a private lender. These investments, nonetheless, have lower risk compared to direct investments. Your mortgage broker will be able to find the venture capital firms in the areas that you are interested in.
Becoming a private investor may not seem so familiar to you before reading this article. But now, after knowing some things about becoming one, you might be interested in that business. You can engage in this financial journey, but always remember to always have a backup plan and money. Remember to take risks and see how far your money would take you.
You can share your journey or some points that other people should know when they become, or decide to become a private lender in the comment section below. Feel free to add up any experiences and tips that you can give to those who are just beginning to test the water. You can also share what you have learned as a private money lender.
10 Ways to Invest in Real Estate Even with Bad Credit
There are a lot of real estate investment strategies out there that could help you do a deal even with bad credit or no money. And it’s your lucky day because you are about to know 10 of these methods. They say ‘if there’s a wheel, there’s a way;’ such is the way of investing. Don’t let your financial status stop you from achieving greater things in the long run.
Here are the 10 ways to help you invest in real estate even though you have bad credit.
1. Hard Money Lending.
This type of real estate financing deals with loans direct from individuals and businesses that aims to finance investments for a return. This type of lending is great for real property investments that require immediate funding, easier qualifying and/or involve difficult or complex transactions. Unlike the traditional loans you get from banks and other private financial institutions, hard money loan program releases additional capital to you and other would-be borrowers without unnecessary delay and heavy restrictions, so clearly, bad credit is out of the picture.
2. Private Money Investing.
If you’re looking for construction loans in bay area, you can definitely count on this type of loan to achieve it. This means that a private, an individual or several individuals’ personal money is invested in real estate or real estate mortgages. It focuses more on the source of the funds lent to the borrowers, as well other considerations from the investor’s side. This type of lending fills a need in financing that is more lenient on the qualifying, more diverse and acceptable to more complex transactions than traditional institutional bank type funding.
This is perhaps one of the most common tips for real estate investors with bad credit because of its give-and-take relationship. This means that one investor can make up for what the other lacks. This could work with the former finding a property at a good price while the latter finances it. The most important thing about this is to be able to bring something on the table, as well as having a defined goal, risk, and roles in order to build a strong partnership.
4. Home Equity.
Another great option for real investors to have a bay area loan source even with no money down is through home equity. This is the value of ownership that is built up in a home or property that represents the current market value of the house minus any remaining mortgage payments. This could mean that there is a higher rate of gaining more capital because property values have increased in recent times.
5. Lease Option.
This option lets you make money from real estate while allowing other people to have home ownership. This means that you have the right to buy a property at a specific price within a specific period of time. This is the “option” that you have, although you don’t necessarily have to buy the property if you choose not to. Most of the time, the perfect candidates for a lease option are home buyers who have bad credit but have reasonable amount of money for a down payment because they have the time to correct their credit if the option term is up to three years.
6. Seller Financing.
This sort of loan doesn’t necessarily give the person selling the property the right to become a private lender; it’s just that the buyer loans from the seller instead of borrowing from the bank. This way, the buyer can purchase the house, but this comes with both parties signing an agreement as to how much is the interest rate, when the payment should be made, and what the consequences of default should be. Truly, this is unlike any traditional loans.
7. Making your own Mortgage.
This method lets you create your own mortgage in order to finance your investment in real estate. No one will check your credit situation, and you definitely won’t need an upfront cash payment. You might not know this but a lot of investors buy privately created mortgages and trust deeds because they can get a really great return in their investment in the long run, and also because it is much safer than investing in stock market.
8. Boost your Credit Score.
The only way to get out of a bad credit is to improve it. You must understand your credit score first before indulging in real estate. This is a statistical method for lenders to know whether or not you are able to repay the money you borrowed. Having good credit scores secures better mortgage rates, which means you can have long-term savings and great benefits as an investor.
This method ultimately doesn’t require you to have a high credit score not a great amount of money down. It all simply boils down to finding discounted properties and assigning the contract to a potential cash buyer for a higher amount, only as payment for doing so. You really need to have patience, time, and great marketing skills in order to make an awful lot of deals.
10. 401K Loan.
This strategy might not be suitable for every investor in every circumstance but this can actually be a wonderful way for you to start your financial freedom journey. This involves taking a loan from 401K which is basically just your own money. Typically, there’s a maximum amount that can be withdrawn, and the loan must be paid back within one to two years. The bottom line is that the only person whom you owe money to is actually yourself. So take that money and turn it into an asset now.
Whatever strategy you have decided to pursue, always remember that you have to appropriate it to your present condition. Besides, if you really want something to happen, you look for ways for it to happen, not reasons to quit. Investing in real estate takes guts and firm decisions that’s why only those people with such commitment prosper in this field. But with these strategies to guide you even with your bad credit, you can at least have a great start.Tell us in the comments below which strategy you think is best. We’d love to know your thoughts.
Saving vs. Investing: Which is Better?
There comes a point in your life where you are faced with difficult choices, and one of these is to choose between saving and investing. Although both can be done simultaneously, but to be honest, as far as being responsible is concerned, having to manage two types of financial matters can mean having too much on your plate. That is why you need to figure out which is better between saving and investing so you can start immediately and reap what you sow.
The first thing you need to do is to know the difference between saving and investing. In that way, you will be able to place your financial status and needs in line with whatever way is best for you.
Saving leans on the short-term goals where you can have a ready-to-go money for smaller activities that you’d like to do in the near future, say three or four years. This includes going on vacation or having money in case of an emergency. This means that you have access to your savings whenever you need it. This causes minimal risk for your money because your funds are insured by the bank. Aside from that, you can also earn interest albeit generally lower compared to when you invest.
Investing, on the other hand, goes for the long-term commitment where you can achieve major financial goals. Take for example when you invest in real estate, you will be able to save for your child’s college education and not just for some summer trips. Although the risk in investing is higher than saving, it has the potential for higher returns. This risk eventually leads to your net worth increasing as you make profits for selling your property for a higher price than you invested initially.
Saving usually goes out for purchases and emergencies. You save for things such as vehicles to ride on, or holiday trips to enjoy in a few months; basically things that are available as soon as you need them, where lower risk is entailed. It involves tracking your savings and putting a deadline to reach your goals. Say for example you are saving for your annual family trip; you need to earmark a certain amount to save in a specific period of time in order to know how much you are going to save monthly.
Investing wisely results to better returns. Small investors in larger projects know that it’s crucial to invest early and wisely. Although, again, this opts for a higher financial risk, the harvest could be overflowing. People who invests in real estate should be patient, besides, you know how the old saying goes, “good things come to those who wait.”
Saving keeps your money safe but gives you very little return. This means that you put your money aside, usually into a bank account, and let it sit and wait until you need to spend it on smaller things like paying for a car, house deposit, or any emergencies that you need to take care of immediately.
Investing makes money for you. When you invest your money, your goal is usually to make it grow and multiply. The things you need to know in investing in real estate allows you to gain properties and assets in which value increases overtime. This allows you to have the opportunity to earn more money than you originally saved.
Whether you are saving or investing, there are some factors that you need to consider.
First is your attitude towards the risk. If you want to play on the safe side and are contented with what you have now, you should save and keep your money safe away from risk. If you are more of a financially adventurous and patient person, investing is the right way for you. Investing in real estate, especially, can help you earn double or even triple the amount you saved.
Second is your financial status. When you’re in debt, out of emergency funds, just went through a recent financial crisis or a major life event, saving could be the best passage for you. However, if you’re in your 30s and you’ve got all the money in the world and you’d like to retire comfortably in about 30 years, investing is the best way for you to take. You can look up to real estate investors on that side of the coin.
Third and last thing to consider is your financial goals. If you intend to buy a new car or put down a deposit on a house, saving for like three years would be a great idea. On the other hand, if you want to pay for your child’s college or wedding fifteen years into the future, investing would fit you best.
To sum it up, if you want your money untouched for specific small occasions, then you need to save. But if you want to see your money grow and multiply into the future, you have to invest. Now, you decide which is better; to let your money sleep or to let it move and do some work?
In the end, deciding whether to save or to invest depends entirely on your goals and financial situation. You need to be sensitive enough and financially aware and wise as to which path to take. But ultimately, saving money should almost always come before investing money. If investing is your ultimate goal, saving money would most definitely take you there. But remember, don’t wait too long to invest; the best time is always now!
Investing in real estate is probably one of the biggest – yet one of the best – decisions you’ll ever make in your life. And just like what they say, you need to start young. Don’t ask yourself when the right time is, because the right time is always NOW.
Why Invest in Real Estate
There are things you need to know in investing in Real Estate and you should understand these things before diving into the water. People get hooked up in real estate investing because aside from it’s one of the best ways to get rich, it’s also quite easy to get started. You heard it right. You don’t have to be an expert or a genius regarding this area in order to invest. As a matter of fact, some of the most successful property investors didn’t even know they could earn fortune through property. It’s only after realizing how much wealth such investing can generate did they finally take the leap.
Another reason is that investing in real estate is much simpler than stocks and shares. Research can be done quickly online or by visiting suburbs without needing to pay specialists to fill you in with so many details. You don’t have to understand how a system works, or delve into the complex world of trading, research brokers, and fund managers. All you need is a good eye and the will to invest.
It’s also relatively quite easy to get finance when you invest in real estate. There are a lot of ways for you to have monetary support for your investment in this area so you won’t be blind as a bat when you start. However, if you’re a first-time real estate investor who has the faintest idea about these, let us tell you how.
7 Ways on How to finance first Real Estate Investment
1. Private Money Investing
This can be private, individual, or several individuals’ money being invested in real estate or real estate mortgages. It is the source of the funds that are lent to the borrowers including some other considerations from the investor’s side. This is quite similar to hard money in some cases, but it is quite more distinct because of lender and borrower’s relationship with each other. In private money, the lender is an individual who wants to have higher returns on their cash and are much less business oriented compared to hard money lenders. This type of lending fills a need in financing that is more lenient on the qualifying and more diverse and acceptable to more complex transactions that traditional institutional bank type funding.
2. Hard Money
If you need immediate funding, easier qualifying or complex transactions, this type of lending is great for your real estate investment. This program releases additional capital to you and other would-be borrowers without any unnecessary delays and heavy restrictions, unlike traditional loans from bank and other private financial institutions. Hard money loan is primarily based on the value of the property and has shorter term lengths with higher interest and fees to get the loan. Hard money lenders usually don’t require income verification and credit references. It can fund a deal in just days. Although this can be great for short term loans, you have to be cautious in using your hard money by having multiple exit strategies as your safety net.
3. Commercial Loans
This type of loan is a feasible option for your real estate investment if you are looking to buy a property with more than five residential property units. While other options just focus more on the residential side of the loans, commercial loans typically have slightly higher interest rates and fees, as well as shorter terms and different qualifying standards. This type of loan is usually availed by developers or investors to purchase or construct apartment or condominium buildings. Commercial lenders can extend a business line of credit to finance other investments most of the time. This allows them to have access to the cash for house flipping and other ventures in real estate.
4. Home Equity Loans and Lines of Credit
In order to avail this type of loan or credit, you have to have equity in your home. This is a type of a loan wherein loan payments are based on the value of the borrower’s home or property. A lot of financing institutions and banks has different services that let you tap into the equity that you’ve already got. For example, an investor purchasing a property don’t have to try financing the investment property itself, rather they can take out a Home Equity Line of Credit on their own home to pay for the property. You can search about Real Estate Financing and Investing regarding this matter to understand more about this.
Having partners in investing can help you finance a deal especially when the piece of property that you want to invest in is a little way over you price range. This is where your equity partner can be a great help in which you can add to your team. This is someone that you include in a transaction to help you finance the property. Your partner can either finance the entire property or just fund the down payment, whichever way suits you both. The thing is that you have to analyze each situation regarding how the deal is going to be, who will make the decision, and how the profits will be split at the end.
6. Owner Financing
This is another way of financing a property for you. This happens when the owner of the property that you want to buy will fund the property while you make your monthly payment to them, rather than in a bank. This is possible when the owner owns the property free-and-clear, meaning the property doesn’t have an existing mortgage from the seller. If it does, the seller’s loan must be paid back immediately before facing foreclosure. Owner financing is a great way to own a real estate without having to go through a bank’s hassle process, if of course, the conditions are right.
7. Local Bank Loans
One way of getting monetary support for your investment is through a bank. But as a first time real estate investor with a tight budget for down payment, going to a large national financial institution might not be the best option. This is because those establishments might not be flexible unlike your local bank. Your neighborhood bank also knows the local market better and is more interested to invest locally.
Now you’ve got plenty of options to choose how you want your first real estate investment to be financed. All these options can help you in their own way; you just need to figure out which one suit you best. Research more and plan according to take your first step and the rest will just follow. Remember, NOW is the perfect time to invest.
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