Tips For Your Real Estate Finance and Investment Strategy

September 2, 2010 by admin  
Filed under Real Estate Financing

You may have decided you would like to start investing in property but you are not exactly sure how to go about it. One thing you should do before you begin is to research the financing options that may be available to you.


Most people, when they first begin their endeavor with property investing, find that financing is their only means of purchasing property. The following is some information regarding real estate financing and investment strategy that may be beneficial to you.


When you hear the term “leverage” applied to real estate financing and investment, you will find that this term simply means to use borrowed money for financing your property investment. Your initial investment will be the money that you use for a down payment.


In order for this leverage to be beneficial in your real estate finance and investment strategy, you will want to secure the borrowed money at a low-interest rate and make sure the term of the loan is over the longest period of time that is possible. This is to avoid yourself from being tied up in the property and having least money for your own or other investment usage.


You do have to remember, however, that the risk of your investment is tied in directly with leverage. If you place a small down payment on the property, the leverage is high and the ratio of the amount owed to the value of the property is high, making the property a high risk. The more money you put as a down payment on the property, the lower the leverage and the lower the risk.


Many, in their real estate financing and investment strategy, use pyramiding to acquire more properties. What this simply means is that you are using the equity on one property to help you purchase another.


For example, you purchase a property for $100,000 by making a down payment of $20,000 and borrowing $80,000. The properties value at the time of the purchase is $110,000. Six months later, you have a positive cash flow of $1,000 a month on the property and its value has increased by $40,000 due to your renovations. You now have equity of approximately $70,000 or more in the property.


You take out a home equity loan of $30,000 and this is used for the down payment of another investment property. This is also known as pyramiding and is a real estate finance and investment strategy used by many.


Pyramiding through sale is also another real estate finance and investment strategy used by many, as well. In this method, when your property’s value has increased, you sell instead of taking out a home equity loan.


In the example above, if the same property was sold for its value of $150,000, you would use the money to pay off the initial loan of $80,000, deduct your initial investment of $20,000, what you have paid in interest and principal, as well as the cost of renovations, to discover you’ve made a profit of approximately $25,000 to $30,000 in a matter of a six-month period. This money can then be used as a down payment on another property.


Before you begin investing in property, it is crucial to understand what real estate finance and investment strategy you plan to use. However, it is also important to understand that property investment comes with risk. Research the facts and figures before you make any decision with your real estate finance and investment strategy.

Get Your Real Estate Investment Guide for Your Success Now. Learn More About Fundamentals, Financial Model and Investment Tips of Property Investment. Find Out Which Real Estate Investment Strategy Gives You Good Return.

Real Estate Finance Overseas

September 2, 2010 by admin  
Filed under Real Estate Financing

After the technology bubble burst back in 2000 the stock markets suffered a bleak period of decline and investors chose to place their focus on bricks and mortar rather than falling share prices and they began investing heavily into real estate.


As a result the second home and the buy-to-let real estate markets in many countries around the world such as in the UK, US and Australia boomed. However, as the real estate affordability gap continues to widen in these nations and fewer first time buyers can even get onto the first rung of the real estate ladder, property price increases have begun to cool off and the ability to generate impressive rental yields and strong capital appreciation has slowed right down for at least the short term.


At the same time the stock markets around the world remain volatile and so now many more investors are looking overseas for alternatives to cooling domestic housing markets and bumpy rides on the stock market. Many are finding that there’s an abundance of real estate opportunity in emerging countries around the world which has created a strong demand for real estate finance overseas.


For those considering joining the jet-to-let real estate investment set here are the three main options available when it comes to raising real estate finance, loans or mortgages to buy property abroad.


1) In many of the nations that were the first to boom the property markets are now stagnant and because lenders have fewer customers to provide finance for they are actively targeting those who have yet to upsize, release equity or take out a second mortgage and offering them increasingly favourable terms, conditions and interest rates.


For anyone thinking about buying real estate overseas in a country where they believe it will be difficult for them to secure local finance or where interest rates are unattractive, the option may exist for them to re-mortgage their existing property or take out a loan secured against the equity in their primary residence.


The negative side of this option to raise real estate finance to buy overseas property is that the purchaser’s primary residence will be the security against the loan and naturally this introduces an element of risk.


2) The second option available to buyers looking for real estate finance overseas is getting a mortgage locally in the country in which they want to buy. Some countries such as Spain, Germany and France for example offer attractive interest rates and payment schedules to buyers from other European nations and many countries offer mortgages to international purchasers who can provide a decent sized deposit.


Anyone thinking about buying abroad would do well to also research which banks and lending institutions exist in that country, whether they are allowed to lend to foreign buyers and if so, are the criteria for getting a loan and the terms and conditions of the loan favourable?


3) The final option available to the majority of real estate investors looking to finance the purchase of a property abroad is an international mortgage provided by an international lender who usually has experience in the country from which the borrower heralds and also in the country in which they wish to invest which can make the whole finance process so much simpler…but the downside is that arranging such mortgages can be far more expensive than the first two options available to those contemplating their real estate finance options.


The availability or applicability of any type of mortgage or finance raising scheme discussed in this article is something that needs to be determined on an individual basis therefore this article does not constitute advice. Anyone hoping to raise finance to purchase real estate overseas should seek expert financial advice.

Rhiannon Williamson writes about property abroad and currently specialises in property in North Cyprus.

Real Estate Finance & Investments

September 2, 2010 by admin  
Filed under Products

Product Description
The Fourteenth Edition of Real Estate Finance and Investments prepares students to understand the risks and rewards associated with investing in and financing both residential and commercial real estate. Concepts and techniques included in the chapters and problem sets are used in many careers related to real estate. The material in this edition is also relevant to individuals who want to better understand real estate for their own personal investment and financing… More >>


Real Estate Finance & Investments