Though investing in real estate can be an exciting, lucrative opportunity, not everyone has the cash on hand to jump in immediately. Luckily, there are several ways to raise funds for a real estate investment, which this article looks at.
Though they generally have somewhat strict qualification requirements, traditional lenders—i.e., banks and mortgage lenders—can be an option for raising money for a real estate investment. To obtain this as a source of funding without a cripplingly high interest rate, you will likely need to make a 20% down payment, with 25% being even more preferable. A credit score in the 700s is also a huge plus.
Private lenders can be another source of funding. Private lenders are individuals who are willing to put up money to fund a real estate investment. To find one, reach out to friends, family members, and other investors you know. While selecting the right one can be tricky, private lenders do offer some advantages. They may be willing to loan to people with a lower credit score, and the timeline to receive funding is often shorter than with traditional lenders.
Specialized Financial Loans
For commercial real estate investments, some lenders, including Integrity Financial Capital, offer specialized lending options to tap into other funding sources. Examples include commercial mortgage backed securities, which offer low interest rates, and HUD and FHA lending. There are also options available for long-term loans for investments such as hotels and owner-occupied residencies.
Stated Income Commercial Real Estate Loans
Another option may be a stated income commercial real estate loan. These loans weigh the value of the property more heavily than the buyer’s credit history, though buyers still need a credit score of 600 or above. Buyers also need to provide proof of employment in the form of W-2 or 1099 documents.
Looking for more financial and business tips? Take a look at Integrity Financial Capital’s other blog posts.