Are You Familiar with This Type of Real Estate Financing?
As a real estate investor, you’re likely already aware of many of the financing options you have available. These include conventional mortgages, home equity loans, owner financing, portfolio lenders, commercial loans, hard money loans, and so much more. An important key to the success/failure of a real estate deal is the utilization of one of these options. However, there’s another option we didn’t mention because it often gets overlooked: real estate line of credit. Regardless of the type of property you invest in, this financing option can help you get your hands on the cash you need when you need it.
A real estate line of credit allows you to apply for and receive cash/credit you need within a short time. Due to the competition in today’s financial world, most financial institutions are offering deals to get you in the door. Some promote the fact that they can finance your real estate deal within days after you have applied for the money.
Home Equity vs. Line of Credit
Many investors use the equity from their own homes to finance a purchase. The bad thing is, this type of financing is secured by your home. Therefore, if you default, the lender can take your home. While this is typically not an issue, a real estate line of credit is better because of the advantages it brings.
A real estate line of credit doesn’t require collateral or appraisals and you don’t have to gather financial statements such as bank statements and tax returns. The only qualifier is your credit rating and personal credit report. Once you have received an LOC, you purchase the property, and do what you want with it: rehab and flip it, rent it, etc. Once you pay back what you used, you will be able to use it to secure more deals.
Using a Line of Credit
Once you have your line of credit in place, you can draw on it and make payments on it as much as you wish. This means that you can invest in and flip several properties with the same funds. This ends up saving money on things that are associated with hard money lenders (interest and “upfront” costs). The best part is that you have the cash in hand to execute deals when you are ready.
Today’s market is flooded with real estate opportunities available for anyone that wants to take part. Contact Masters Commercial Capital Group when you’re ready to get started on your real estate investment journey.