Finance Your Real Estate Investment Properties
by: Peter Dobler
Unlike traditional residential real estate mortgages, real estate investment financing is way more creative and offers more options than you think. The golden rule in real estate investment is OPM (Other People?s Money).
I have enough money; shouldn?t I buy my real estate investment for cash? No, I absolutely advice against investing large sums of cash into a single real estate investment. There are two reasons why not. First, you give away most of your profits by not leveraging your real estate investment. Second, it is far too risky to put every egg into one basket.
Let me explain the leverage issue for a moment. I will give you an example of a $100,000 investment property that typically increases its value (appreciates) by 7% average a year. Maybe more, maybe less depending where you live. Paying all cash for this property will yield in a 7% appreciation profit plus the net profit from renting the place. Now you?re looking at roughly 15% of returns.
If you?re conservative with your investments you might be satisfied with this kind of a return. These days you might get equal or better returns with other conservative investments minus the hassle of being a landlord. But you don?t mind being a landlord, because you understand and utilize the leveraging method with financing your real estate investment.
With the example above you will make roughly $15,000 a year in profits from your investment. Now let?s take a closer look at what leveraging can do for you. Today a typical real estate investor can get financing as high as 95% - 97% of the purchase price. Occasionally 100% financing is available as well. But this would be totally unfair in this example to compare this with all cash purchasing.
15% return sounds like a lot, but wait till you see this. Let?s assume that the rental income will cover all your expenses including the mortgage payments. Taking the same example from before your net return would be the 7% appreciation profits of your property. This would translate into a $7,000 a year profit. With a 95% financing in place you would get $7,000 return on $5,000 (your 5% down payment) invested. This is a whopping 140% return on investment.
With the same $100,000 you can go out there and get 20 investment properties, finance 95% of it and make an amazing $140,000 profit a year. This beats the projected $15,000 profits with an all cash transaction any day.
Of course you will have a lot of trouble to get financing for 20 properties in a single year. Typically 5-6 new rental property mortgages are the maximum lenders will allow these days. This is the signal to get creative with your financing structures.
In this case sellers financing would be your key to achieve your goal of maximum leverage of your investment dollars. Despite the message from all these late night infomercials, seller financing is harder to get than they want you to make believe it is.
It all depends on the seller?s ability to offer seller financing and the seller?s motivation. Only about 1 out of 20 properties for sale are able to get seller financing. That means that there?s no mortgage balance on the property. From this narrow selection the seller must be motivated to sell under these conditions. This could be tax reasons, time constraints, personal reasons and many more.
As you can see this translates into a lot of work to achieve your goals. But let me tell you one thing. This separates the tire kicker real estate investors from the real go-getters. Wouldn?t you agree that a little bit of hard work and determination is well worth it to build a real estate empire?
I think it is well worth the trouble and hard work. At the end of the day you keep building your real estate investment portfolio and sooner than later you will be able to cash in.
Sincerely,
Peter Dobler
Copyright (c) 2005 Peter Dobler
About The Author
Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner. Learn more about real estate investments at http://www.suncoastrenttoown.com or send a blank email to mailto:suncoastrenttoown@getresponse.com
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Purchase Order Financing: for Start-ups and Established Businesses
Purchase Order Financing: for Start-ups and Established Businesses
by: Donna Poisl
If you are a new business and you get a request for a huge order, it's exciting, isn't it? You start mentally adding up all the money you will make, all the supplies you can buy, all the business you can get after that.
Then when you talk to the manufacturer of the product, and discover they need partial payment before shipping, perhaps even some when you place the order and the rest on delivery, you realize you'll have to refuse the order. Since you are a new business, you don't have the credit history that will allow you to have payment terms and you don't have a bank line of credit.
If you are an established business and you get a huge order, you also might have to refuse it. You might not have a good credit history or might not have a large enough line of credit with your bank.
There is a solution, called Purchase Order Financing. If...
Purchase Order Financing: for Start-ups and Established Businesses
Financing > Purchase Order Financing: for Start-ups and Established Businesses
Purchase Order Financing Overview
Purchase Order Financing Overview
by: David Springer
Knowing the ends and outs of purchase order financing is an asset to almost any small or medium sized business owner. In the sections below you will learn just exactly what purchase order financing is, the benefits, drawbacks, who can benefit the most from it, and would be likely to qualify for it.
What is purchase order financing?
Purchase order financing is another way to get a loan for the capital you need to finance the supplies, production, and shipping of a product after you have received a purchase order from a buyer. Once you produce the finished goods and are paid, you can then pay off your invoice to the company who provided you with funding.
This is a perfect solution for small start-up businesses who have orders coming in but don't have the finances required to order supplies, pay their workers, and ship the finished goods. This would also be a great opportunity for...
Purchase Order Financing Overview
Financing > Purchase Order Financing Overview
Helpful Tips for Lawsuit Loan Brokers
Helpful Tips for Lawsuit Loan Brokers
by: Tony Perkins
The world of a lawsuit loan broker is often turbulent due to a cyclical industry, inconsistent litigation financing companies, and the struggle to weigh advertising expenditures vs. the resulting leads.
You (litigation broker) must not only survive but must flourish during active times of the year in order to be able to survive the downtimes.
First of all, let me quickly define what is a lawsuit loan and a lawsuit loan broker:
Lawsuit loan: A cash advance based upon the merits of a lawsuit that provides a plaintiff with sufficient funding to reach the conclusion of the case when the plaintiff will receive his/her fair share of the settlement or verdict.
Lawsuit loans are not based on a plaintiff?s prior credit or bankruptcy status.
Lawsuit financing companies give non-recourse funding to plaintiffs thus requiring the plaintiff to pay back the advance and...
Financing > Helpful Tips for Lawsuit Loan Brokers
Buying Versus Leasing A Car
Buying Versus Leasing A Car
by: Jeff Neilan
If you are considering whether to buy or perhaps lease your next car and which would afford you the best deal, most consumer experts agree that from a purely financial aspect you will be better off in buying your next car.
Of course paying cash in full is the best possible scenario since with this option you would avoid any type of finance charge. But for the vast majority of us and for the scope of this article we?ll take a look those purchases or leases that involve financing.
In the short term leasing may look attractive to you because monthly lease payments will more than likely be less than the monthly payments of a purchase agreement. Why? Because with a lease you are essentially only paying for the part of the car you are going to use. It?s kind of like splitting the cost of a pizza with someone. You are only paying for the pieces that you are going to eat. In car terminology the part...
Buying Versus Leasing A Car
Financing > Buying Versus Leasing A Car
Financing suv Finance Your Real Estate Investment Properties
Financing Finance Your Real Estate Investment Properties spyware
Financing Finance Your Real Estate Investment Properties
Financing Finance Your Real Estate Investment Properties