Real Estate Investor Loans

In this discussion, we are going to focus on real estate investor loans and how they can be used to acquire the properties that you need to expand your real estate business. As with most things related to real estate, the most common method of obtaining financing in order to secure the income producing properties that you are seeking is to acquire real estate investor loans that allow you to purchase a copy that you're seeking while generating income from the rent that you receive by managing the property on an ongoing basis. In today's economy, demand for real estate investor loans had increased sharply despite the issues with the credit markets. This, apparently, had been due to the fact that the downturn in the value of residential and commercial real estate - investors that are well capitalized have come into the market with the intent to purchase these properties at a substantial discount.

 

Also one of the more recent developments in the real estate investment industry is that many people are now approaching banks to purchase properties that have entered foreclosure and have ultimately become the property of the bank that lent the money to the individual to buy the property initially. In many instances, banks are willing to sell these properties at $.50-$.75 on the dollar. As such, a well capitalized real estate investor then you may be able to acquire a substantial number of income producing properties at a significant discount to ultimately provide the rental income that is necessary to service your real estate investor loans but will also will provide you with appreciation over the long term as the real estate market finalizes its collection.

 

As it pertains to real estate investor loans, the standards as it relates to obtaining traditional financing for bank had increased significantly. This is primarily due to the fact that that during the last 10 years the regulations and the standards required by banks in order to obtain a real estate investor loans were substantially lowered. As we have discussed in some of our previous articles, this was primarily due to the fact that banks have stopped holding on to mortgages but rather have sold them to third party investors that package them into large loans or bonds that were sold to pension funds, insurance companies, hedge funds, investment banks, and other financial stations that sought to generate interest income from these package loans for collateralized mortgage obligations. However, this has changed significantly over the last three years has tighter regulations have become prevalent in legislation and banks are not willing to take the same risks that they would in the past when providing financing for real estate investments.

 

As such, if you are in the market for a real estate investor loans then it is imperative that you have the appropriate credit score in place, the appropriate experience in dealing with real estate, as well as a 10 to 20% down payment that can be used in order to further secure the loan. This, again, is due to the fact that banks and financial institutions are no longer interested in selling their collateralized mortgage obligations of the parties as much of the capital within this market has dried up over the past three years. This trend is expected to continue for at least another two to three years as the real estate market finalizes its correction while concurrently having the credit markets finalize their collection as it relates to taking good risks for their real estate investments. In many instances, the programs that were once available five years ago as it pertains to 100% financing, or even in some cases 125% financing, for real estate investments has dried up. As such, you definitely need to be prepared to make a significant capital investment into the properties that you intend to purchase for income producing purposes. However, there are a number of creative real estate financing strategies that you can use that will allow you to capitalize on any equity that you already have other investment based real estate properties that you own. In many instances, you can hypothecate the existing real estate equity that you have for your portfolio of real estate assets so that banks will not only lend to you based on the residential or commercial property that you're seeking to purchase now, but also, you will be able to tap the equity that you develop in your existing real estate portfolio to act as collateral for the overall loan. This is becoming a very common trend of people actively buy and sell real estate with the intent to not only generate rental income but also with the intent to generate appreciation over a significant period of time.

 

The ways that many people seek real estate investor loans is by going directly to a bank in order to receive the financing that they're looking for as it pertains to property acquisitions. This is a very good way of obtaining the financing that you need in that you'll keep working directly with a lender that will be providing you with the financing in order to further your real estate operations. However, you may also want to use a mortgage broker that has access to a number of lenders throughout the United States that can provide you with the best real estate investor loan possible based on your credit score, based on your experience within the real estate industry, and based on the specific property that you're looking to purchase. Of course, mortgage brokers at work on a commission basis and you can anticipate that you will pay a fee equal to 1% to 2% of the total loan amount for individual or a company that specializes in mortgage origination that is able to provide you with the capital that you need in order to acquire income producing properties.

 

In the past three years, since the collapse of the credit and real estate markets, mortgage brokers have received a very bad reputation for pushing very high priced and very expensive loans on individuals that were not fully aware of the consequences of the specific credit facility that they were seeking to obtain. However, if you are very well versed in real estate financing and real estate investor loans then it may be in your best interest to work for mortgage poker that can introduce you to a number of different lenders that will provide you with the capital that you need in order to further your operations. In this introduction to real estate investor loans, we are going touch on a number of different subjects beyond traditional commercial lending as it pertains to quietly income producing properties.  We will also discuss, this article, as well as other articles, other sources of financing that you can use in order to obtain the properties that you were looking to acquire. This is especially true as it pertains to commercial real estate. In regards to commercial real estate, many property owners are willing to now hold back a note which is the equivalent of a mortgage then it you are seeking to acquire commercial property that caters to retail stores and other businesses that are conducting retail operations through the commercial property that you're looking to acquire. When negotiating with a commercial real estate owner, you should most definitely ask if they are willing to hold back a certain portion of the equity as a subordinate secondary mortgage when you apply for traditional financing for a real estate investor loans.

 

As it pertains to real estate investor loans from, one of the things that have now become common among traditional financial institutions, hard money lenders, and other entities that extend credit for real estate acquisition operations has been the continued need for a commercial property is a formal business plan that outlines the specific nature of your real estate operations. TheFinanceResource.com has developed a number of specific business plans as it relates to acquiring both commercial and residential properties of a  large scale as well as on a small scale so that you can more actively provide your lender with the information they need in order to render a credit or investment decision. We strongly recommend that you review these business plans of the offers will website as it pertains to your real estate buying activities. As we have said time and time again, the best thing that you can do when approaching a bank, investor, or other financial institution that provides real estate investor loans is to be fully repaired to showcase exactly the properties that you're looking to purchase while showcasing the general operations of your real estate business. If you are able to do this you will be in a much better position to receive the credit that you're seeking in order to further expand their portfolio of income producing properties, both on the residential and commercial basis.

 

As it pertains to real estate investor loans, when the best places to start your research is to approach a local bank that has a complete understanding of the specific market that you're operating within as it pertains to your income producing real estate asset purchasing operations. These banks, are far more likely to blame to you because they have a greater understanding of the local real estate market and your ability to place a lender within the property that you're looking to acquire. Of course, if you are seeking to acquire property that already rented then you will be in a much better position for receiving the real estate investor loan. If the commercial property for residential property that you're seeking to acquire is already producing a positive income from rental income then you will be able to more easily obtain a real estate investor loans that you're seeking. However, this is not always the case. This is primarily due to the fact that the banks, when acquiring a commercial or residential property want to understand the quality of the tenants that are currently leasing the property that you are seeking to acquire. As such, it is again important, that you showcase very clearly the property that you were seeking to acquire as well as the variable expenses, property taxes, and other expenses that are related to the property that you want to add to your real estate investment portfolio. If you able to do this very effectively through a well developed commercial property acquisition plan or residential property acquisition plan as it pertains to your real estate acquisition operations then you will be any far better position to receive the real estate investor loans that you have applied for from a financial institution.

 

One of the things that has come to light as of the last three years due to the fallout from the credit markets is that you will need to have the appropriate credit in place in order to receive the financing that you're seeking. This is primarily due to the fact that banks make sure that you prior financial history is in line with developing your real estate business over time. It should come as no surprise that a bank, financial situation, or other lender will demand that you showcase your personal financial history, your personal credit, your business credit, and existing real estate business returns from the previous three years of your real estate operations. As such, you should work very closely with your certified public accountant to develop a plan as well as a presentation that clearly shows that you are an active real estate investor and that you can continually service the debt obligations that come with obtaining real estate investor loans.

 

As it pertains to banks, financial institutions, and other lenders that specifically focus on real estate the demand has currently shifted towards providing real estate investor loans for individuals and real estate businesses that focus on acquiring residential real estate. This is primarily due to the fact that residential real estate is far less risky than commercial real estate. If you are currently engaged in the business of real estate acquisition then it may be in your best interest to focus on acquiring smaller properties that produce ongoing income from residential properties. Again, banks and other financial institutions have been focusing on residential property acquisitions as a far less risky proposition as it relates to real estate investor loans. Commercial properties, of course, come with the risk that the individual business that is housed within your commercial property can fail. This is especially true in today's economic environment where up to 65% of businesses are now at a failure rate for a five-year time frame. However, if you are seeking to acquire a real estate commercial real estate property that has a brand name tenant then you may be in a position to acquire this property more easily especially since many large scale corporations that rent real estate is it of a commercial nature tend to assign extensive leases in order to further their operations as a retailer.

 

As it pertains to real estate investor loans, we are to continue discuss alternatives that you can use in order to obtain the financing that you need to acquire the income producing properties that will expand your real estate portfolio over time. In many of our future discussions, where to focus on things such as hard money lending, venture financing, equity investor financing, an angel investor financing as it relates to it developing and expanding your real estate investment business. This is especially true if you intend to engage, primarily, in commercial real estate acquisitions in order to produce income from traditional retail stores as well as other businesses that are looking to develop a brick and mortar presence within the properties that you own. Of course, as we have said time and time again, it is always imperative that you seek appropriate counsel through certified public accountants as well as real estate brokerages and business consultants that have a specific focus on real estate prior to engaging in any specific activities as it pertains to the acquisition of commercial or residential real estate. If you are able to effectively have the appropriate counsel in place, you will be in a far better position to make decisions as a relates to acquiring real estate investor loans that are in their best interest and that will ultimately provide you with the rental income and capital appreciation that you're seeking to gain through the acquisition of income producing properties.

 

On a side note, we do strongly recommend that you purchase our guide to real estate investor loans and other issues pertaining to real estate investing so that you can more fully understand the specific nature of what goes into developing a highly profitable real estate investment business. Thank you again for tuning into our article as it pertains to real estate investor loans and will continue to provide you with new insightful information as it relates to acquiring real estate investor loans for your continued expansion and development of your real estate business.

 



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