Are you currently looking for ways to invest your funds into real estate?

One effective way to build passive income while optimizing your retirement plan, and obtaining financial freedom is through investing in real estate. Like other investments, you’ll need to be prepared to put in some capital to buy a property so you can start making money. Although usings savings or borrowing from your trusted circle are both great options, it’s safe to say most investors would rather rely on bank loans, private money lenders and other reliable resources.

It may seem like an uphill battle when it comes to raising the capital needed for your investment especially if you’re just starting out but truthfully, it isn’t that hard at all. By far, the most important factor is to try and understand the different loan options available, what lenders are looking for, and how to negotiate with them.

With that being said, here are 6 ways that you can start securing some capital for your real estate investing business!

1. Know the different options of financing

Before you make any kind of drastic decision on your investment, practice due diligence in your research to find out the different types of financing options available and which one would work best specifically for your business and your goals.

• Bank financing

Most bank mortgages are loans that an investor borrows in order to buy a home/real estate. From there the loan must be paid in full over time or through the available payment plans options. Keep in mind that the property purchased using the loan is considered collateral.

Mortgages are usually available at different rates which include both fixed and adjustable rates. Fixed rates usually remain the same throughout the duration of your payment period while adjustable rates can be modified through the timeframe. The rates most often depend on the term of the type of loan, the amount of money borrowed, and also the interest rate for the lender you chose to work with.

The most common-fixed rate option for mortgage terms typically fall within 30 and 15 years. The term, for other mortgages, can be shorter while others can be longer. Being able to stretch the term helps reduce your monthly payment but in turn increases the total amount you will have to pay back to the lender.

While the adjustable rates have a set fixed interest for the specific initial duration. However, the rates can start to change periodically. Most often you will notice there are certain limitations to how much the rates can vary when the interest is adjusted.

• FHS Investment Loan

If what you’re looking for is a loan option with lower eligibility requirements, then you may want to look into the FHA (Federal Housing Administration) loans. Through these types of loans, lenders tend to offer better terms since the loans are insured by the FHA. You can apply regardless of what your income level is.

Typically, FHA loans are given to the owner occupied properties. In order to invest your money in real estate, you have the option to leverage the FHA loan to buy multi-family homes and live in one of the units while you rent out the other units to tenants. After a certain period of time arranged by the mortgage lender, you are able to move out of the property altogether and rent out all of the units.

Typically, the maximum amount offered on a loan with the FHA is $356,362 but this can easily increase to $822,375 in certain areas where property values are higher.

• Private Money Lenders

One of the first things you should know is that private money lenders are not in fact associated with any financial institution and are looking to invest in viable ventures. So the key to convincing a private money lender to fund your project is to make sure your pitch is flawless and that your projected numbers make sense and are accurate. This is why going through training on the real estate investing side is important so you can get advice from experienced investors that have gone through this personally and can help guide you.

1. Clear your debts and work on your credit score

Banks usually take into account different factors before going and approving loans. Those usually look at:

• Your debt to income ratio
• Credit history
• Assets
• Bank statements
• Tax returns

In order for you to qualify for an FHA loan, your credit score should be above at least 580. You have to have a stable income, a good credit score and very minimal debt are the main things that you should work on to heighten your chances for an FHA loan approval.

1. Arrange the down payment

You’ll most likely see that many of the different loans require you to make a form of down payment.

Think about it like this, FHA loans down payments can be as low as 3.5%. While the down payment for the for other kinds of loans like adjustable rate mortgage or jumbo loans; their percentages range between 10 – 20%.

1. Promise realistic and accurate returns

With crowdfunding and private money lenders, one thing your potential investor has to protect is their investment. Many lenders therefore depend on the collateral to make sure that they don’t lose their investment in any worst case scenario. As your job to succeed with your pitch, you have to convince the lenders that your scenario is a reliable investment.

If you’re too overconfident or end up promising large returns will most likely have your potential partner thinking that it’s a scam or a high risk investment.

Despite you believing your pitch is achievable, it’s always best to underestimate and deliver more later. This will at least help build rapport and credibility with your money lenders. When you initially project an ROI at 6% but end up producing around 12% increase with your initial investment.

1. Networking and building connections

When you’re just starting out you want to think about building relationships with other investors that can help you when looking for the best deals. It’s usually pretty tricky finding people that think similar to you that are also looking for partnerships. That’s why making sure you network early can help you thrive in the long run. You can always start by participating in local events and webinars/seminars to listen in and see who you’d think would be a great fit!

1. Getting trained in real estate investing

Participating in custom made investment courses created by experienced investors is a solid way to start out in the business. Being able to get mentored and have the support of other women in similar shoes as yourself is one of the great ways to get started. That’s why we offer detailed courses in real estate investing for women that contain a step by step guide to how to get started, the techniques my daughter and I use, networking events, and ongoing support.

With all of the right tools and information you’ll need in the business, you can develop a great foundation for success.

CTTO Article Source: www.biggerpockets.com