In the past couple of decades, many people have grown rich through real estate. But with the problems that have occurred over the past couple of years, investment property financing is no longer as easy to acquire as it once was. So where should today's investor go if real estate is his investment of choice?
The first stop might be the bank or mortgage company. But these days, traditional banks are more interested in providing corporate credit to their largest customers, and are still not willing to take many risks on real estate. Some will consider it if the down payment is substantial enough-twenty percent or more-but there is no guarantee that such loans can be found. If the potential investor has valuable assets that could be used to secure the loan, the bank might reconsider investment property financing. But the borrower should take care in pledging his own paid-off home or retirement account for an investment that might not pay off. The hard and fast rule is that no one should risk an asset that they aren't willing to lose.
Many times the seller himself might be willing to accept a down payment and allow the investor to pay out the balance of the sale price over time. This is called seller financing and it can be beneficial to both parties. The seller makes some interest on the sale and has a guaranteed income for whatever time period was agreed upon for the repayment. The buyer doesn't have to go through a lengthy approval process for his investment property financing or pay application and processing fees. But not all sellers are willing to make this kind of deal. Most want-or need-their equity right away.
The potential real estate investor could try putting together his own group of investors. This involves a convincing a number of people to pool their money in order to purchase an investment property. The primary benefit is that everyone could make a little money on such a deal. Another benefit is that no one person will be out the full amount if the property's value decreases and ultimately resells at a loss. The primary drawback is that the ultimate return on the investment will be low because it is split among numerous people. And someone has to be in charge of coordinating the deal. That can come with headaches of its own if too many individuals are involved in the project. Investment property financing for a group is not for the faint of heart.
There are a number of companies that advertise online. The wise investor will do more than read such a firm's website and immediately think that each one is like another. Investment property financing involves a level of expertise that should not be trusted to anyone who knows how to put up a website. The wise investor will double-check the credentials of any potential lender, and will ask for references from several of the firms other clients.
Better still, a potential investor should talk to other property investors to find out what lending firms they have used. Nothing is more reliable than a few word of mouth references from customers who really know the firms with which they have worked. Such references can also put a potential borrower in a better negotiating position. He can walk in the door of the investment firm already armed with information on how that firm conducts itself. As with any other investment, information is power in real estate investing.
Corporate Credit Concepts specializes in Investment Property Financing. For more information about Investment Property Financing and how it might benefit your business, please CLICK HERE for a free phone consultation.