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Ways To Finance Your Real Estate Business

Posted Thursday, January 3, 2019

Whether you are a real estate agent eager to be your own boss, or perhaps an investor looking to take your real estate portfolio to the next level, financing is always an issue. While there are many different sources of financing available, choosing which ones will work best for you can be challenging. To help with the decision-making process, here are several ways you can finance your real estate business. 

Commercial Loans 
If you choose to go the conventional route, commercial loans will be your first option. However, be prepared to have your financial life closely scrutinized, including your income, credit rating, and current debt levels. Whether you are wanting to purchase an office for your business, or instead are looking to buy a prized piece of investment property, commercial loans can help you accomplish your goals. 

If you are an inexperienced agent or a beginning real estate investor, taking on a partner can give you access to an experienced professional as well as a source of financing. In addition to bringing experience and money to the table, a partner can also offer guidance on how best to obtain and use referral leads in your business. But remember, if you do decide to have a partnership, have an attorney draft a contract where all details are clearly spelled out, such as what percentage of ownership each partner has in the business, stipulations for ending the partnership, and so forth. 

Owner Financing 
Once you have received numerous referral leads and are well on your way to success, chances are you will come across a piece of property you know will be a great investment. However, if a bank will not grant you the financing you need, all is not lost. In many cases, the property owner may be willing to construct an owner financing deal with you. If this occurs, instead of making a monthly payment to a bank, you simply pay the person selling you the property. And best of all, not only can you use this strategy to purchase properties, but also when selling your own properties. 

Home Equity Loans 
If you have equity in your home, you can tap into that to finance your real estate business. In these situations, banks will lend you a percentage of your home's value, which can vary from one lender to another. However, it is very common to find lenders who will lend you up to 90 percent of your home's value. 

Since there are many ways to finance your real estate business, don't be afraid to explore all options. By examining various strategies, you'll discover a little creativity can go a long way toward building a successful real estate business.