Investing in real estate projects is always a smart way to make money. However, you need to carefully choose your assets to enjoy a predictable cash flow and excellent returns. As an investor in real estate, you can build wealth if you make the right choices like using outside financing instead of only investing in properties you can afford to pay with your own money. Investing in properties you can only afford to buy on your own is not a practical solution when it comes to real estate and it might not be profitable. There are many benefits to investing in real estate projects that include smooth cash flow, tax breaks, building equity and wealth, risk-adjusted returns, and inflation hedge. If you are starting a new real estate project, read on as we will show you how to easily get financing for new real estate projects.
If you don’t qualify for mortgages or the whole process is too slow for you, don’t worry, there is a solution for that. There are many non-bank lenders that can lend you money. However, you need to be careful when choosing one so that you don’t fall for scams. The best thing about borrowing money or taking loans from non-bank lenders is speed. Non-bank lenders can close your deals in just two weeks! On the other hand, traditional banks take from forty-five to sixty days. Even better, they sometimes offer 100% funding for the purchase. Moreover, the applications can be processed in ten to twenty minutes on online lenders’ websites.
Hard Money Loans
With traditional mortgages, you need a long time to close deals, but they offer very low-interest rates. On the other hand, hard money loans are much faster in closing deals and more flexible regarding that matter but they have higher interest rates. The short-term loans in MA are much faster than traditional bank loans, for example. It is better to choose one that is run by real estate professionals in your state, as they are involved in the market and know exactly what your needs are. Taking hard money loans is not sustainable in the long run, but it is the perfect solution when you have a great deal at hand and you need to close it quickly.
Buy to rent is another option that might come in handy if you don’t want to take out hard loans or if non-bank lenders don’t match your needs for any reason. While traditional banks look at personal income, buy to rent options look at the rental income of the property. It is one of the best options for new investors in the field.
Close Friends & Family Members
Funding that comes from family members and friends does not require putting in your own money, which is great. Moreover, some very well-known billionaires in this field started out this way, so it is a very successful strategy for investors who are just starting out. Moreover, it is more flexible in terms of restrictions and speed, which is much needed for closing good deals quickly.
Trust deed investing is a continuation of the funding from family and friends strategy. One or more private lenders will give you a mortgage taking the place of traditional banks. However, you have to provide them with a deed of trust. Therefore, there are terms that you have to agree on, and the private lender will have the authority to foreclose on the property if you do not meet the agreed-upon terms.
For your first investment, it is better if you get a mortgage that is insured by the Federal Housing Administration. If you buy a property with an FHA loan, you can pay 3.5% as a down payment for a multifamily property, where you can live in one unit and rent the others! Moreover, you get to hold a property while receiving rental income, so you practically live without paying rent.
Investing in real estate can make you a millionaire or even a billionaire. However, smart choices and sound decisions need to be made. The great thing about investing in real estate and starting new real estate projects is that you don’t have to start big. Moreover, it is always better to finance your projects by taking loans from traditional banks, non-bank lenders, FHA loans, asset-based mortgages or get your project financed by trust deeds or family and friends. Whatever strategy you decide to finance your real estate project through, you need to study each step to avoid losing your money on useless projects or failing to close deals.