Investing in real estate could be a profitable venture for everyone in New York, but it could also require significant financial resources. Fortunately, there are several creative ways that professional real estate investor can structure their financing to minimize risks and maximize returns. In today’s blog, our Real Estate Funding Solutions team will help shed light on the top creative financing for real estate investors.
Personal Loans
Personal loans are great options for quick financing for real estate investors in New York. Several loan companies can offer you personal loans as quickly as the next business day as long as you qualify. You can generally use a personal loan for anything you like. Consider it a viable option to help you invest in new real estate or renovate your current investment property.
When taking a personal loan, you can expect a traditional lending agreement where your lender sets the interest rate, loan limit, and fees. Sometimes you can also get a few options on your loan term. Your credit history will be critical in bringing these loans, so ensure you improve your credit if you want the best terms and rates.
Owner Financing
In real estate investing, you will not get what you deserve; you get what you negotiate. So as you are making offers, feel out to your seller on whether they are open to owner financing. You could negotiate seller financing if you cannot get funding from a portfolio or conventional lender. It could come in the form of a seller-held second mortgage.
In owner financing, you and your seller can negotiate everything from your interest rates to loan terms and beyond. Generally, this type of financing for real estate investors involves a balloon payment: you must refinance your loan within a few years to help pay off your balance in full. It will give you time to build up your credit and give your property time to appreciate.Â
Cross Collateralization
If you have some equity in another real estate property, consider putting it up as additional collateral when applying for an investment property loan. Your real estate lender will take the first lien position on your new property and the second on your existing real estate. In exchange, they will lend you 100% of your real estate purchase price, so you will not have to save for a down payment.
For instance, if you have a property worth $250,000 and owe $100,000 against it, you could take out a HELOC or a second mortgage to tap into that equity. However, you will have to pay for another round of closing costs. Instead, when you find a property you like, you can ask a lender if you could give them a second property as additional collateral instead of providing a 20% down payment. This way, your lender will get two real estate properties as collateral to protect them, and you will get access to 100% financing.
Business Credit Lines
You might not think of business credit lines as real estate financing, but they can be an essential tool for real estate investors. A business credit line is a loan that enables you to access a certain amount of money you can use. You will only pay interest on the part of the loan that you use and can borrow money again once you have paid it back (like a credit card). Business credit lines are ideal since they give investors the cash they need before going through the complicated and lengthy process of applying for a traditional loan.Â
Contact Real Estate Funding Solutions To Learn More About Creative Financing Options.
Creating financing solutions can be an excellent way for investors to get financing when they don’t have the traditional means. Our Real Estate Funding Solutions team can tell you about several different types of creative financing options. Each kind of financing will have its own pros and cons. Call us at 855-913-8637 to book a discussion with our experts right away! Our team can help you find the perfect financing that works for all the real estate deals coming your way.