Real estate investing is a popular way to earn a side income for some people and is a full-time gig for others. Before you consider going into real estate investing, you should understand that it takes time and financial resources just like any other type of business. That said, the initial output of cash might not be as high as you would expect. We outline some of the most common ways people finance their real estate investing ventures below.

Options for Financing a Real Estate Investment

People buying their own home typically don’t have enough cash on hand to pay in full when the ownership transfers to them. The same is often true of real estate investors. After you locate one or more properties you want to invest in, you may need to secure financing through a traditional mortgage loan. This could be an especially good option with interest rates so low right now since it allows you to maintain your cash flow. You should expect to put down at least 20 percent on each property you buy and then finance the rest with a conventional mortgage.

Owner financing can be an attractive option if you don’t want to deal with applying for a loan and you find a seller willing to accept the arrangement. However, the seller should own the home free and clear without a mortgage or any liens against the property. You would make monthly payments to the seller directly. Keep in mind, though, that you do not technically own the house you’re using for real estate investing purposes until you have paid the seller in full.

If you currently own your own home, you might consider taking advantage of a home equity line of credit. This loan uses the equity percentage of your home as a basis for the amount you qualify to receive. Of course, you will need to have good credit and meet all other bank requirements as well.

The above represent just three financing options for your real estate investment. Please contact Increase Lending today to learn more about how to achieve your investment goals.