Wednesday, October 14, 2009

Show Me the Money!

You are ready to invest in real estate; you even have found the right property and a willing seller, and now that pesky problem: where to find money?
Many options are available. For example, investigate using your HELOC. A HELOC , or Home Equity Line of Credit, is extended to a homeowner by using his home as collateral. There is a maximum amount that the owner can borrow, but he may draw on that line of credit as desired. The interest charged is usually the prevailing prime rate. Repayment schedules, which can vary form 5 to 20 years, are negotiable as long as the interest payments are made monthly. This option can be particularly powerful for the investor if he has amassed equity in his home, and if low interest rates are available. In this economy, this may be a viable tool for investors.

Secondly, credit cards may be a viable option in the short run. Hang on to those promotional offers!

Often times, relatives and friends are willing to partner in sound real estate investments. Don't forget that rich Uncle! You may be doing him a favor in providing an investment with better returns than his other investments are currently paying. Sometimes co workers or clients are open to investment opportunities, and through pooling such resources, you can accumulate a sizable amount.

Consider limited partnerships- such arrangements may give you the immediate cash flow benefit you need. The seller himself can often be creatively induced to enter into a funding agreement with you, particularly if he is highly motivated to sell, as many are in this economy.

Your 401 K is another source of funds that can be partially liquidated, or you could borrow against the cash value of your insurance policy. Stocks or other equities may be cashed in.

Of course, hard money lenders are always a possibility. Sometimes lenders can be flushed out by perusing the 'wanted to buy" ads, or even a more direct approach- take out a newspaper ad yourself asking for potential lenders who may be eager to invest in a real estate project with you. Tell the potential investor how he benefits- " I have the opportunityto buy a $200k house for $100k, but I need a cash investor. I do thework, you invest the cash, and we split the profits.”

The only limit to finding private money for your real estate needs is your own hesitation. With creativity and a little knowledge, you can be the greatest source of generating needed capital. Sometimes YOU can be the best source for private money- and that's OK!

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