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Real Estate Investment Financing

Use These Finance Techniques To Increase Your Net Worth

The area of Real Estate Investment Financing, is one that can have a huge impact on your progress as a property investor.

Starting from approaching a lending institution for a loan for your first REAL ESTATE INVESTMENT PROPERTY to building your property portfolio, the plan I recommend HERE is one that will see your net worth increase considerably and within a short time the banks will be treating you with the utmost respect.

Of course the way in which you obtain and use Property Investment Finance will have a bearing on how fast you progress and just how soon you can retire!?!

These real estate investment financing ideas and concepts will take you from uncertain initial contact with the bank to a seasoned property investment finance pro.

Be Prepared

This is an important step towards obtaining the best terms & conditions for your your real estate investment financing.

Right from your very first approach to any bank or lending institution you should be armed with a document that clearly shows your current assets and liabilities and your income and expenses.

So transform yourself from an hopeful applicant into a knowledgeable long term cliant. This is what banks love.

This has proved to be an extremely positive factor for me on numerous occasions in negotions with various loan officers. For our first two investment properties, we didn't have one and we were treated like amatuers.For the next time we approached the banks to apply for a loan, we went equipped with a document I had produced that gave a clear Statement of Financial Positionand showed our income and expenditure.

Avoid Cross Collateralisation

What is cross collateralization and why should I avoid it?

Cross Collateralizationoccurs when the bank uses the security for one loan to secure another loan. The advantage of doing this is that you can borrow a greater percentage of the purchase price of the next property, perhaps even 100%.

The disadvantage of cross collateralization is that it can bring your real estate investment financing strategy to a standstill.

You may find that because of cross collateralization you are restricted or unable to purchase another investment property.

For example it is usually mandatory that the properties being cross collateralized be in the same state. If you want to be free of restrictive banks Cross Collateralization rules then use a line of credit to borrow the funds you need instead.

Refinancing Real Estate Investment

This is one of the best ways to begin real estate investing and to keep your real estate investment financing moving freely. The best thing is that you can arrainge things so that any one property is not held ransom by a bank or financier (which can really put a dent in your property investing plans).

Refinancing real estate investment provides the perfect method for any property investor to extract capital from the increased value of a property without selling it.

This is a great way to move forward with your property investing plans and keep your real estate investment financing options open.

If you were to sell sell an investment property you immediately lose the future capital gains, income stream and taxation benefits that property would bring.

What's a HELOC and What Can It Do For Me?

A HELOC is a Home Equity Line of Credit.

This is where a bank values your home and determines the available equity you have in your home and then makes funds available up to a perentage of that amount.
This is the most flexible and effilcient way to get started with your real estate investment financing!

How can a home equity line of credit help you with your real estate investment financing you ask?

Once you have established a line of credit you can use it to fund any shortfall that you may have when purchasing an investment property, that includes deposit amount and purchase costs.

This is by far the most preferable way to purchase your first and successive investment properties.

Investment Property Mortgage Rates

Should you be concerned with investment property mortgage rates?

Many "property experts" say that INVESTMENT PROPERTY MORTGAGE RATES should not be of primary concern when looking for a PROPERTY INVESTMENT LOAN. This is only true if you are not concerned with your immediate cash flow situation. Read a more detailed analysis HERE.

No Down Payment Investment Property

This is tied in to the previous tips on refinancing and use of a line of credit.

The general ides is that you purchase a no down payment investment property using the equity you have in another asset, usually your home.

Real Estate Investment Trusts

If you prefer a hands off approach you can invest in a REAL ESTATE INVESTMENT TRUST. You can find more details HERE.

However, in my opinion, there are many more advantages to INVESTING IN REAL ESTATE directly.

For more information about a Home Equity Line of Credit see this article:
Steps to Freedom: What Is A Line Of Credit

A Home Equity Line of Credit (often called HELOC, pronounced HEE-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period ...

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Friday, December 4, 2009