Getting started in real estate investing doesn’t require a huge fortune. Truth be told, savvy investors often pick up properties, putting no money down on their own, financing the entire acquisition, while still turning a healthy profit. In fact, the more you leverage or borrow, the higher your return on equity ends up being, making no-to-low money down a favorable strategy for shrewd buyers. Below are a few real estate funding options you could use to fund your first acquisition.
An FHA Loan
If you’re making your first investment, a great way to go is to get a mortgage insured by the Federal Housing Administration. With a down payment of just 3.5%, you can pick up a multifamily property, live in one of the units and rent out the other units.
Hard Money Loans
Even with record-low interest rates, traditional mortgages easily take around 60 days to close, which is a long time when you’re making a deal and looking for real estate funding options. Hard money loans — despite their higher interest rates — give you the flexibility to strike quickly if you have a great deal on your hands.
Trust Deed Investing
With this real estate funding option you’re essentially taking a mortgage from one, or more, private lenders who would function as a bank, giving them a deed of trust as collateral on the property.
Hybrid Financing: Debt Mixed With Equity
If you have a really good deal, finding the funds is the least of your worries. Say you’ve gotten 75% of the LTV, you need to come up with the remaining 25%, assuming you don’t have the cash in hand. To fill this gap you can take out a hybrid loan, mixing the traditional payment schedule of a mortgage with a piece of ownership or equity for the lender.
Whatever route you choose, Real Estate Funding Solutions is always here to help you go over all your real estate funding options. Visit us online at www.realestatefundingsolutions.com to learn more!