3 Ways to Fund a Real Estate Investment

Posted by ilscash on September 23rd, 2019

Real estate has long been a desirable way of investing. A common problem is an amount it takes to acquire a property. Even if the place will provide a solid return, many people don’t have the funds needed for the initial investment. Fortunately, there are several ways that you can obtain the funding needed for your real estate investment. Here are a few ways that you can obtain the necessary funding for real estate in Texas.

FHA Loan

A common way that first-time homeowners obtain the necessary loan to buy a home is a mortgage insured by the Federal Housing Administration (FHA). This is a popular method because it requires a lower minimum credit score and a lower down payment than traditional home loans. If you buy a multifamily home, you can live in one unit while the other is rented out. This will allow you to ease your way into a real estate investment. Especially important if you’re a first-time homeowner or renter.

Hard Money Loan

A real estate deal can take a while to close, potentially taking up to 60 days. That might be too much time if you find a good deal. Those could be gone within a matter of days. A hard money loan will allow you to close quickly, ensuring that someone else doesn’t sneak in and steal your property. While the interest rates of hard money loans may be higher, you can use it as a bridge until you can obtain traditional financing. This will allow you to acquire the property while you work through the process of receiving a loan.

Non-Bank Mortgage Lending

The problem with obtaining a loan from a traditional bank is the time it takes to complete the loan. Many times it takes between 45 and 60 days before you can close a deal with the assistance of banks. That’s plenty of time for somebody else to come in and purchase the property. Non-bank mortgage companies are becoming more popular as they can process a loan application in 20 minutes. The deal can then be completed within two weeks. A major reason for this difference is the requirements of banks. Many banks deal with several loans simultaneously and consider a person’s income, FICO score, and tax returns before approving a loan.

Acquiring the necessary funding for a real estate investment can be a long and difficult process. However, there are ways that you can obtain the necessary funding easier and quicker to ensure you acquire a certain property. These are three alternative ways to bank loans for acquiring funding for real estate in Texas.