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Buy Hold Financing-What’s In It for You
June 11, 2015
Real estate is probably one of the most lucrative markets for investment. Buy and hold is described as the ultimate get rich slow scheme where investors build their equity for many years before enjoying the fruits of their labor. Buying and holding is expensive and it requires a lot of money which is one of the greatest challenges, here are a few proven methods to overcome such challenges.
FHA finances 99.5% at low interest for homeowner properties, although it’s a great place to start to qualify you need to be employed. A great advantage of using FHA loans is that they finance you for a fourplex, which gives you the option of living in one unit and renting out the rest.
Save, Buy and Hold
Saving puts you one step ahead to owning a home, for most people with solid jobs it means living below their means while setting aside money to invest. People who use this method are at a much greater advantage to get bank loans and invest in real estate. However, finding good deals and managing properties with a job is a great challenge.
Flip and Hold
Flipping is more of buying real estate at a discount, improving it and selling at what the market will bear. It’s probably one of the most safest and effective ways to get into buy and hold. Flippers try to live off the bare minimum and hold onto every 2nd and 3rd flip using profits from the first flip to live off and use the profits from the 2nd flip as down payment for a property on hold. And repeat the process over and over again.
Sometimes sellers are motivated when an opportunity to get into a property for little to no money is presented. This creative financing method can be owner financing or a land sales contract. This is how it works if the seller has some equity they can loan you the money to buy their house from them or they can give you a second loan to back up your bank loan. Another great option for creative financing is transferring the deed to you but leaving the original mortgage holder, such deals though do not cover any repairs.
Bank loans cover a small percentage of the full cost of the property, to counter this you can find private investors. Private investors include people with some money to invest in such deals; with private lenders they can fully finance properties with a rate of 7-12% interest. If you find interested investors come up with a business plan and case studies that produce legitimate returns. Always have a better interest rate than your competitors.
Another great option instead of private lenders is finding one person with a lot of money. This is straight forward and easy way to get into buy and hold with an equity split equivalent to the investment. Buy and hold can grow your wealth considerably and whatever method you choose to its better to start immediately.