5 Ways to Finance a Real Estate Investment

Banks are the tried-and-true method, but other sources for real estate investing include credit unions, microloans and arrangements through a private lender.

As more people realize the benefits of investing in real estate, their first question often focuses on financing – specifically how to get it.

Securing sufficient financing can be challenging, but various lending options are suitable for supporting a commercial real estate business.

Most people already understand the process of obtaining bank loans. They tend to be easier to take on and are widely used. When a property is purchased on loan, the equated monthly installment (EMI) continues to decrease over time, while the value of assets increases. In addition, buyers can secure desirable properties at low down payments and flexible repayment durations.

Meanwhile, credit unions offer competitive interest rates and no shareholders, chiefly working on a membership basis. New investors or those in fluctuating real estate markets can find good financing opportunities, such as pre-payment flexibility.

Private lending may attract investors if an inadequate credit history makes a bank loan difficult. With private loans, borrowers benefit from flexible qualifying requirements. The disadvantage includes higher-interest rates, down payments and personal collateral.

Microloans are another funding option. They generally feature lenient qualifying terms and credit score requirements.

Small Business Associations (SBA) loans offer higher borrowing limits and provide longer terms. SBA loan benefits also include lower down payments, the ability to maintain stable cash flow, and protection against balloon payments. However, they can only be used to start a real estate business – not for property investments.

Gary McAdams, PA
Realtor/Notary Public
Barbara Anderson Realty You 
Key West, Florida 

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