In general, for the small investor, it is somewhat problematic to find capital for a high-risk/high-return property even in a so-called “buyer's market.” In general, savvier investors will do their homework ahead of time - on the property itself, on the neighborhood and on the prevailing sentiment in the investing community.
Then, with these pertinent facts in hand, they can lay out a compelling argument as to the lucrative opportunity that awaits their potential investors. Still, regardless of how attractive a deal looks on paper, financing investment properties is just not that easy.
In actual fact, entrepreneurial buyers often run into a host of problems when it comes to financing their projects. Here are just a few of their more common problems:
Anything from a standard 3-plex to a resort villa will fall outside the guidelines of a traditional lending institution. For more unique properties, a real estate entrepreneur must look to other funding sources like private money lenders.
While traditional lenders are willing to customize the lending terms of a mortgage, they usually charge exorbitant fees and interest for the privilege. Other lenders are far more reasonable in their costs when they take these factors into account.
Whether you are flush with cash and no credit or vice-versa, traditional lenders like banks and S&Ls are unlikely to consider you for a loan because you fall outside the guidelines for government guarantees. Private money lenders will look at your overall track record and your most recent accomplishments to overcome this fact.
Traditional lenders are now looking to turn down as many real estate loans as possible. With the current governmental regulatory climate, it is simply not in their interest to approve any loans that deviate from the norm by even a little bit.
The best place for entrepreneurial real estate buyers to find investment capital is with private money lenders. These organizations have the experience, the expertise and the resources to provide it at an affordable cost and with reasonable facility.
For more information on financing investment properties in creative ways, contact your local real estate professional or a private money lender. They will have the right answers for any situation.