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5 Useful Financing Strategies for Real Estate Investments


There are numerous ways to make money from real estate ventures, yet, one should be careful not to run into too many projects if they are not experienced and sure in their investments. Thus, read the following lines and learn what are useful financing strategies for real estate investments, and see how you can apply them to suit your style of doing business. Real estate investments are among the top money-making methods you can utilize nowadays. For example, Yieldstreet is a platform that offers accredited investors a wide array of real estate investment options. Surely, not everyone can do it, otherwise, the competition would be unimaginably fierce and one could only dream about making real estate investment their main source of income.

1. Wholesale

Source: Medium

If you have talent in sales, then this one is the perfect strategy you should use to make a name for yourself in the real estate industry. Namely, the point of wholesale real estate investment is to sell as many properties as you can, not fixating on a single buyer, but offering what you have to several potential purchasers. They say that every commodity has a buyer, and your assignment, according to this technique, would be to find both the goods and the future owner, working as a middle man between the newly acquired real estate and the fresh proprietor. When you buy and sell real estate in bundles, it means you have material to use as collateral and make use of particular loans. Since you should be convincing to operate in wholesales, we would not recommend you go for this type of real estate financial venture if you do not have a skill set of a successful vendor.

2. House Hacking

Source: The Hindle Team

This particular strategy is an ideal way both to save money and even make some while initial investments are minimal. The catch when house hacking is in question is that you can be both the one who rents the place and the tenant at the same time. The only prerequisite is for you to have a spare room at your place which you can modify into a living space you would rent afterward. The technique owes its name to the usual works that need to be done so a housing unit is divided into multiple segments, all of them being designed to fit the needs of the tenants. Thus, a single home can become a duplex, or a garage can be transformed into a decent living space with minimal investments that would pay off as soon as you start renting. You can say cash is the best way to finance anything, but you cannot rely on working with solely paper bills if you want to succeed in this business. A home equity loan is ideal for this type of venture since not only you will continue living in the home you rent but you can also support the loan repayment from the rent you receive monthly.

3. Fix and Flip

Source: FortuneBuilders

Since there are numerous TV reality programs based on the idea of fix and flip, the chances that you know what it is all about are major. Although a conception of the strategy might seem too good to be a true story, it really is. Surely, for the project to succeed it still needs you to invest both your money and your time so you could earn some cash if you find a buyer for the place you renovate for later sale. The point is to find a property that needs certain repairs and particularly for that reason to pay less than it actually is worth. The price of the real estate automatically grows after it is refurbished so you can expect to earn significantly more than you originally invested. Surely, this approach requires you to own initial capital, which can be a problem to the ones who have good ideas but lack funding. Fortunately, at Venterra Real Estate you can find additional info on how to fix that issue easily and acquire the property you desire without struggle. On the other hand, you can use ARM loans on ventures of this magnitude, but you should be careful since they can cost you a lot if you hold on to the property longer than you planned in the first place, since these loans are ideal for short-term real estate possession, because the interest rates become higher in time, while they are low at the start of the process.

4. Home Equity Loan

Source: AARP

Although property owners avoid using their residence as collateral, there are times a budget needs a financial injection in order to recover in the following period. Depending on how efficiently you handle the acquired funds, you can either win or lose, so we suggest taking this type of loan when you are feeling positive that the real estate you intend on purchasing will enable you to earn even more than you initially invest. The interest rates are not high and can be stretched out for long periods, so if you handle your properties efficiently and momentary experience financial insufficiency, this might be a suitable solution to your status.

5. Conventional Loan

Source: SimpleShowing

Loans such as this one seem to be the best alternative if you think about living in a real estate that you intend on purchasing since the interest rate you would pay if you opt for a conventional loan would not exceed 5%. On the other hand, an investor would have to pay as much as 4 times higher interest rates if they would choose this option. An amazing thing is that you solely need to cover the deposit and ask for a loan in order to be granted. Surely, the property you intend on purchasing would be used as collateral in case you neglect your financial obligations towards the lender. Why this type of loan is a better solution for the ones who intend on using the property for longer is that the average loan duration exceeds 15 years.

After reading through the lines below, you should be able to opt for a particular financing option more easily. . Since the style of your real estate trading influences what financial strategy works best, we advise you to assert your options before making any important decisions. Thus, read the aforementioned pieces of advice as many times as you need, to make the proper move to get the most out of your future real estate acquisitions.

Learn more about wholesaling real estate check Roofstock post.

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