One of the most common pitfalls for those starting in Investment Property Finance is that many investors fall into the trap of relying on ‘specialists’ to provide them with their funds. They think that they can purchase properties ‘naturally’ and then pay the developer over time. This isn’t the way the process works. Many investors make the colossal mistake of believing that a specific property type will always be priced desirably. Unfortunately, most of the time, it doesn’t.
As a real estate expert and property consultant, some ubiquitous stumbling blocks deter most investors from receiving their required funds. Hopefully, the following will be your number one strategies for getting your investment property loan funded. Keep in mind that each of these methods will take time and effort on your part, but the payoff could well be substantial. So, how are you going to manage your finances to make this happen?
First of all, if you aren’t already doing so, you should become a real estate investor. Many investors feel that they aren’t cut out for the unique challenges associated with being a hard money lender. However, there are many opportunities to become a hard money lender that doesn’t involve dealing with lenders. This means that you can quickly get your investment property finance started without depending on outside financial institutions.
If you are still deciding whether or not you are cut out for the investment property loan game, consider taking on an apprenticeship with a local merchant. An internship is a great way to learn the trade of lending money. While you are learning the ropes, you will be gaining valuable business experience that will help you when you finally decide to pursue your investment property loan career full-time. This can be a particularly great option for those who aren’t interested in relying on traditional bank loans.
Once you have gained enough business experience to feel comfortable working on your own, you can turn to traditional financial products like merchant cash flow and commercial property financing. Your commercial property financing options choices will be minimal when you are still relatively new to the investment property finance game. However, you will quickly be able to expand your selection of financial products once you feel more confident about your ability to do so independently. For example, some of the more mainstream merchant cash flow products are offered exclusively through significant banks. These loans often come with repayment terms that are almost impossible to meet if you are working on your own.
Most commercial property investors also prefer to use peer-to-peer lending services to get their investment property finance. Peer-to-peer lending companies provide an incredibly affordable alternative to bank loans. This is because they do not require as much credit approval process or collateral. This type of peer-to-peer lending service is perfect for those property investors looking to get quick cash loans.
One thing that property investors forget to think about is the need for good property development finance. Property development finance is one of the most important aspects of any real estate investment project. Without the proper finance, you may find that you cannot complete the necessary upgrades to make your property development successful. The majority of new residential construction and commercial property developments typically require funding for site development, land surveys, and engineering services. The need for property development finance is especially prevalent in larger projects where plenty of workers need employment once the project is up and running.
Most importantly, the success of any real estate investment relies upon having the right business contacts. When it comes to bridging finance and commercial property finance, it is imperative to develop strong business relationships with your suppliers, subcontractors, bankers, and other professionals who work with you. As your business relationship develops with these professionals, you will find it easier to get the loan you need to meet your goals. Good luck!