|
Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
Real Estate Investing - Creative Financing for Real Estate Investors
For a very long time, investors who purchased property always put 20% of
the purchase price down, and financed the remaining 80%. 20% was the minimum
down payment. But recently, that has changed. Now, there are numerous choices
that investors have when it comes to getting a property investment
financed.
This is true for investors and people who are purchasing property as a primary
residence. One of the most common ways to finance a property is to obtain
more than one loan, which comes in the form of a second mortgage. When this
is done to obtain a property, the purchaser usually borrows 15% of the sale
price, gets a seperate mortgage for 80%, and then kicks in the additional
5%. However, the 15% that is borrowed usually has a higher interest rate
than the 80%.
This may sound like a great way to get financed, without having to put down
a large downpayment out of your own pocket, if you are okay with the higher
interest, but there is another aspect of using this method of financing that
you should be aware of. When you have less than the required 20% to put down
on the property, you will often have to carry private mortgage insurance,
which can be expensive.
Even after you have made enough payments to cover the original 15% that you
didn't pay for the downpayment, the lender will still require you to carry
the private mortgage insurance, until you have paid the loan down to the
point where the actual loan amount is equal to at least 80% of the value
of the property, and the second mortgage is paid down considerably.
There are other ways to finance property, however. For instance, if you are
purchasing property in a new housing tract or community, the home manufacturers
will often provide financing if you are one of the first buyers. This typically
happens before the homes are finished being built. In this instance, you
can often get financed by only putting 5% down.
Some people buy property, and then sell it again, without ever actually owning
it. For example, you can buy a property and have a contract in place, and
sell the contract to another buyer for up to $5000. You never actually owned
the property - you just had a contract with the property owner. This isn't
easy to do, and it requires alot of skill - and good credit.
Subject-to-deal offers are another option. In this arrangement, a seller
deeds the property to you, without changing anything about their own mortgage.
You start making their loan payments for them, and when the loan is paid
off. The loan is theirs, but the property is yours. This also takes alot
of knowledge and skill to pull off.
A limited partnership offers another financing alternative for investment
property. Each partner puts up a certain percentage of the downpayment, and
each partner profits from the property according to the percentage that they
have invested in the property. These deals can be very different from one
to the next, but they do work out well. You may even work out a limited
partnership where one partner puts up the investment capital, and you perform
services such as repairs or maintenance of the property.
Special financing can be obtained if you are low-income, military, or have
other special situations. There are numerous government loan programs that
will help you get into a home, but in most cases, these programs are only
available to those who will be living in the home, or building on the property
with the intention of living in the home that is built.
At one time, people purchased property with the use of credit cards. In recent
times, however, this method of investment has become more obsolete simply
because it is a good way to get deeply into debt very fast. Credit cards
have high interest rates. Even if you are just using your credit card to
cover the rest of the downpayment, when you do this, many mortgage lenders
will turn down your loan, simply because you now have all of this outstanding
debt.
Borrowing from friends and family is another way to get the money that you
need either for a downpayment, or for the purchase price of a property. But
if you will still need financing, you will usually have to prove to the mortgage
company that the money from friends or family was a gift, and is not a loan
that has to be paid back.
 |
 |
Previous |
Next |
|
Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
Search for Beginners Real Estate Investing Information
|
