Financing issues are no longer an excuse to avoid investing in Real Estate
May 19, 2022
As many of us know, Real Estate development can be one of the most lucrative small businesses there is. A smart businessman who can take reasonable risks can build an empire that finances a comfortable, rewarding lifestyle.
Although no formal training is required to become a developer, successful residential and commercial real estate developers have certainly gained their training from experience. However, starting your own real estate development business and finding investing clients is not dependent on a certain level of education.
However, some real estate developers have had formal training in a specific field, such as commercial real estate broker, general contractor, or residential real estate broker, all of which require specialized training and licensing. Or they may have worked for a company that specializes in construction management or property management. Experience in different areas of the real estate market can certainly help you be the competent manager of an investment property that is being built from the ground up, especially when it comes to more diverse projects.
Nowadays, many people want to invest in real estate but are hesitant to take the plunge and do not know how to finance a real estate deal. Many assume that it is impossible to start a business without their own capital.
There are a variety of ways to finance a real estate business without using your own money. Not only are there real estate development loans, but there are many private lenders willing to take a risk on your business. Here are 4 ways you can finance your real estate development business:
Private Lenders: private lenders can be anyone who has access to capital and is willing to invest it. In other words, a private lender can be anyone from a close friend to someone you met at a networking event. As their name implies, private lenders are not institutionalized or licensed to lend money, but do so to get their money back with interest. The terms of private lenders are usually easier to meet, and the length of time they are willing to lend money for is much shorter, but at the cost of a higher interest rate.
Hard money lenders: hard money lenders are not institutionalized, but may be licensed to lend. Their loan terms are typically short and are leveraged to the asset in question. Hard money loans carry a high interest rate, but they can provide borrowers with quick access to capital.
Home equity loans and lines of credit: Home equity loans and lines of credit are a type of revolving credit - not unlike a credit card. However, home equity loans use the equity in your home as collateral.
Traditional Loans: Traditional loans are those you receive from a bank or institutional lender. Their interest rates are relatively low in order to remain competitive. However, the terms are usually long, and the lending is on a large scale. Most traditional loans have terms of 15 to 30 or more years and carry a low interest rate.
As you can see, financing problems are no longer an excuse not to invest in real estate. We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 800-369-2342.