As interest in real estate investing rises, you may be one of the many interested in getting involved in these lucrative opportunities. The biggest challenge in this investment is that it typically requires substantial capital to invest. If you’re interested in real estate, there are more ways for you to finance your first investment than you may realize. Here are a few ideas.
Pay Your Way
If you have modest savings, you can use that money to finance your first real estate investment. When deciding to choose this option, keep in mind that you’ll need a detailed budget that will allow you to see your investment through to the end. In addition to purchasing the property, you may need to hire contractors, pay for zoning and building permits, and market the updated property. As long as you’re confident that you can meet all of these financial obligations, using your own money can help you maximize the profit, you’ll eventually earn.
Find a Portfolio Loan
A traditional lender will usually sell a loan to another commercial lender, including big banking corporations with tighter restrictions. Portfolio loans aren’t traded or sold in this manner, which means you’ll stay with that original lender. As a result, you can find a loan with better terms. Getting approved for a portfolio loan is also less complicated with less strict conditions. The downside is that this type of loan is difficult to find. If you network with bankers, advisors, and other financial executives, they may be your best resources in finding this type of loan.
Get an FHA Loan
The restrictions on FHA loans are intended to prevent real estate investors from using them to their advantage. However, a stipulation in the rules allows buyers to obtain a multi-family home as long as the buyer occupies one of the units. Provided you maintain your primary residence in one unit, you’re free to rent the other units out to tenants. This can be a great way to give your real estate investing career a jumpstart.
In time, you will raise enough capital and earn enough good business credit that you’ll find it easier to finance future investments. You’ll also improve your skills in a way that will allow you to reduce your spending on each investment. As you go through this learning curve, you’ll also make fewer mistakes. Before long, you’ll be a successful and respected real estate investor.