Raising Money for Property Investment
The global population is approaching 7 billion, demand for housing is high but economic uncertainty still looms over many countries.
Many property investors are looking further afield but a lack of finance is stopping most budding and seasoned property entrepreneurs in their tracks.
However there are still ways of raising finance to invest in property.
Being able to obtain the right finance depends on the price of the property you want to buy, your credit history and the funds you have at your disposal.
It is often said the amount of profit you can expect to make from an investment is largely determined by the price you buy it.
For example, in the UK investing in below market value property has become quite popular.
These properties are usually owned by people who are currently in financial difficulty and need to pay debts off quickly.
Some people may find this practice unethical, but in some cases a sell and rent back scheme can allow a family to stay in their home for as long as they need to and relinquish the over bearing burden of huge debt.
An astute investor can sometimes pick up a below market value property at a 30% discount.
So if you buy a low value property with a large deposit at a discount you can immediately build up a sizable amount of equity.
Raising Finance for Investment Initially other than dipping into your own nest egg using private investors is the next best way.
Private investors are often people you know and already have some kind of relationship with.
The way you structure the loan is a key point.
If like many new property investors you want to start off small you maybe able to raise enough money to buy for cash.
In this instance it is important to establish the purpose of the investment.
If you want to trade the property, refurbish it and quickly sell it on for a profit you may want to look at a daily interest charge as opposed to a percentage profit share.
A daily interest charge is advisable because it is far more accurate and cost effective than a monthly charge.
In some cases you might be able to buy a property using none of your own cash.
If you manage to buy it at a big discount and it needs some work you can refinance, pay back investors and then sell it on to make a tidy little profit.
If you do not know any investors you can use sites like Property Networking Club and Singing Pig.
You can also obtain specialist property development loans from high street clearing banks and specialist lenders.
An average deal which you will be offered may be 60% of the sites value and 100% of the development costs.
To obtain a loan of this kind you will need to clearly define the sales process and your strategy for selling off plan, which reduces the lenders risk.
Commercial bridging loans are another avenue of finance.
They are short term loans which often last no longer than 12 months and are usually secured against a property.
A bridging loan can be an expensive way of borrowing and is used if finance is required quickly.
You can expect to get around 70% of the property value, which means you would have to find the rest of the cash yourself.
A bridging loan can be useful if you want to secure a property quickly and are confident you can turn it around in a short amount of time.
For beginner property entrepreneurs using your own money and those of experienced property investors is a good idea.
You can learn from them and choose properties which are low in value and discounted that also offer good potential for modernization.
Many property investors are looking further afield but a lack of finance is stopping most budding and seasoned property entrepreneurs in their tracks.
However there are still ways of raising finance to invest in property.
Being able to obtain the right finance depends on the price of the property you want to buy, your credit history and the funds you have at your disposal.
It is often said the amount of profit you can expect to make from an investment is largely determined by the price you buy it.
For example, in the UK investing in below market value property has become quite popular.
These properties are usually owned by people who are currently in financial difficulty and need to pay debts off quickly.
Some people may find this practice unethical, but in some cases a sell and rent back scheme can allow a family to stay in their home for as long as they need to and relinquish the over bearing burden of huge debt.
An astute investor can sometimes pick up a below market value property at a 30% discount.
So if you buy a low value property with a large deposit at a discount you can immediately build up a sizable amount of equity.
Raising Finance for Investment Initially other than dipping into your own nest egg using private investors is the next best way.
Private investors are often people you know and already have some kind of relationship with.
The way you structure the loan is a key point.
If like many new property investors you want to start off small you maybe able to raise enough money to buy for cash.
In this instance it is important to establish the purpose of the investment.
If you want to trade the property, refurbish it and quickly sell it on for a profit you may want to look at a daily interest charge as opposed to a percentage profit share.
A daily interest charge is advisable because it is far more accurate and cost effective than a monthly charge.
In some cases you might be able to buy a property using none of your own cash.
If you manage to buy it at a big discount and it needs some work you can refinance, pay back investors and then sell it on to make a tidy little profit.
If you do not know any investors you can use sites like Property Networking Club and Singing Pig.
You can also obtain specialist property development loans from high street clearing banks and specialist lenders.
An average deal which you will be offered may be 60% of the sites value and 100% of the development costs.
To obtain a loan of this kind you will need to clearly define the sales process and your strategy for selling off plan, which reduces the lenders risk.
Commercial bridging loans are another avenue of finance.
They are short term loans which often last no longer than 12 months and are usually secured against a property.
A bridging loan can be an expensive way of borrowing and is used if finance is required quickly.
You can expect to get around 70% of the property value, which means you would have to find the rest of the cash yourself.
A bridging loan can be useful if you want to secure a property quickly and are confident you can turn it around in a short amount of time.
For beginner property entrepreneurs using your own money and those of experienced property investors is a good idea.
You can learn from them and choose properties which are low in value and discounted that also offer good potential for modernization.
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