Real estate investing certainly carries a hefty price tag. It takes a considerable amount of up-front cash to buy a property, make the necessary improvements, and get everything ready for your property to start making money for you. If you don’t have all the cash you need on hand, don’t give up hope! There are multiple ways that you can get your hands on the money that you need to get your real estate investment up and running.
Government-Backed Investor Loans
Certain loan types, such as FHA or VA loans, which are backed by the federal government, often require smaller down payments ranging anywhere from 0% to 3.5% down. While that percentage may go up depending on your credit score, as long as you’re above a 580 on your credit score, you should be able to obtain the loan for a minimal down payment. However, these loans are only available to owner-occupants of the home. To be able to get a federally backed loan, you have to commit to living in the property for at least twelve months before you begin using it as an investment. Depending on what type of renovation your subject property needs, you may be able to start working on the property while you live in it.
Home Equity Line of Credit
Often referred to as a HELOC, a home equity line of credit is a solid choice if you don’t have access to six months worth of cash or liquid assets needed to back an investment property. To get a HELOC you basically let your home stand as collateral for the loan, which means you are at risk of losing the property if you can’t make the payments. To secure the investment in some capacity, you can consider only taking out a loan for the portion of the money you need, which will minimize your risk.
Private Money Financing
Instead of financing through an institution, a private money financing option puts you in touch with a private person who has access to the funds that you need. Depending on your relationship with the lender, they may be willing to finance all or a portion of the money you need to secure your investment property. The interest rate and repayment requirements will vary from private lender to private lender, so you’ll want to be well informed before you come to any agreements.