Exploring ways to invest in the real estate market
Buying an investment property is an excellent way to make an additional profit and build wealth in the long term. Plus, it's possible to invest in real estate even if you don't have the money to purchase a property.
Bank loans can help, but these undergo complicated processes since banks would require you to already have some cash on hand.
So how can you invest in a property when you don't have the money? By exploring and learning about other financing avenues, including:
Private Lenders
The standards of private lenders are usually not as strict as traditional banks. If you're looking to purchase a property but don't have enough money in your bank account, or you may have a poor credit record, corporate lenders are an option. Compared to banks, their processing time is often faster.
Another option you can try is a personal lender. A personal lender can be anyone you know who can help you settle your investment in the property. It can be one of your family members, your long-time friend, or a colleague.
A personal lender may also cost you less and help you gain valuable experience that you can use to secure better conditions for your next property investment.
Love Money
Love money is the seed capital extended from family or friends to you to help start your venture. Using love money allows you to raise your capital with the help of your family or friends, although it is not for free, as they will have a part of your property investment, making them shareholders in the investment.
What's good about love money is that you establish close ties with the other investors. In addition, it helps ensure that you have funds available.
Your Equity
Your net worth or equity is another source you can tap into to buy a property when you're in a financially limited situation. With equity, you can invest in a property at a lower interest rate.
Moreover, the equity's interest percentages are reduced compared to other types of loans. Therefore, as you pay the mortgage, you accumulate equity, which you can use to apply for another mortgage. That equity then helps you acquire a new bank loan to buy another property to earn a profit.
You can access your equity with a home equity loan, which is a loan against the value of your house. You can borrow a certain amount of money based on your home's or rental property's value. Lenders usually permit borrowing up to 80% of the value of the mortgaged property.
Refinancing your mortgage is another way to tap into your equity and have a down payment. However, keep in mind that changing your first mortgage contract could have a penalty fee that you may need to pay.
Credit Card
Using a credit card is another avenue you can
consider when purchasing a property without cash. However, if you decide to
take this route, it's crucial that you carefully negotiate your loan's interest rate because you would want to pay it off
right away.
