FUNDING STRATEGIES FOR INVESTORS YOUR GUIDE TO FINANCING TYPES, CONSIDERATIONS AND SOLUTIONS FOR YOUR INVESTING SUCCESS T hriving as a real estate investor today requires meaning they lend based on the value of the “hard” asset, rather than your personal borrowing strength, making the loan process considerably faster and easier than conventional lending. CONVENTIONAL LENDERS – With interest rates at
a sound and stable financing strategy. Having a consistent, reliable capital partner is perhaps the most important element to building a solid business model. It is natural to be apprehensive in these uncertain times. It is often in the most uncomfortable times when the greatest opportunities are born. As an investor, by preparing yourself to be in the best possible liquidity position to exploit these opportunities, you will be poised for optimal business growth. Financial and business strategies evolve over time, and depending on your business goals, there are a myriad of capital or financing options available. Here is a guide for developing your financing strategy. TYPES OF FINANCING PRIVATE LENDERS – This includes two completely different types – 1) Individuals (friends, family, accredited investors, etc.) that self-fund real estate investments, and 2) Professional money lenders, sometimes called hard money lenders. These are institutional private money lenders whose capital partners include banks and Wall Street investment firms. These are asset-based lenders,
historic lows, banks, credit unions and mortgage lenders are common if you meet traditional lending criteria with significant personal borrowing strength. Drawbacks may include lower LTVs, higher down payments and a more difficult and time consuming qualification process for a bank loan on an investment property. MORTGAGE BROKERS – Brokers do not actually lend the money, instead they work to find you the right lender from all the options available. For this expertise, they take a commission in the form of points on the loan, which you pay at closing. REAL ESTATE PARTNERSHIPS, JOINT VENTURES (JVS) OR EQUITY PARTICIPANTS – Individuals or companies may be brought into a deal to invest their money in a property. Be prepared to provide a cash flow analysis and business plan that may include detailed rehab plans and financial forecasts.
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