Posts Tagged ‘financing real estate investments’

HomeVestors Knows The Options For Financing Real Estate Investments

Monday, September 23rd, 2013

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Real estate investors who don’t have the money to finance real estate investments can borrow it from private parties, hard moneylenders or the bank.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years.  The company knows that there are many different techniques for financing real estate investments.  Investors who have the necessary network contacts can borrow money from private lenders, most notably friends and family.  Others have to use the services of hard moneylenders or banks, assuming that they have the necessary credit score and down payment.

An investor with a plethora of real estate knowledge, but the inability to obtain the capital required to purchase an investment is a theoretician, not an investor.  In order to be a real estate investor, access to capital is an absolute must.  In order to obtain this capital for financing real estate investments, the least expensive and most flexible option is to borrow it from friends or family.  While there are obvious positive aspects to this, there are also serious negative aspects as well.  Those who borrow money from friends or family must be adamant about paying it back in order to remain on good terms with those they are closest to.

When creating a lending contract with friends or family, spell out the terms of the contract clearly.  Be sure that both parties understand what they are getting involved in and honor the terms within.  The beauty of financing real estate investments in this fashion is that the terms can be extremely flexible and the interest rates are usually low.

Those who are unable to loan money from friends or family should consider other options, like hard moneylenders or banks.  Hard moneylenders will generally work with people who have the capital to pay for about 35% of the property upfront and will offer about 65% for financing real estate investments.  These agreements may have many fees and the interest rates are astronomically high.  Those who decide to secure financing from a hard moneylender need to have a quick exit strategy in order to justify the expense.

The most common way to financing real estate investments is to borrow the money from the bank.  Those who have excellent credit and about a 20% down payment can obtain a loan from the bank at a relatively low interest rate.  This can allow an investor to purchase a property under a long-term loan, effectively leveraging their capital.

Those investors who understand the various options when financing real estate investments can choose accordingly and obtain an investment property.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.