Investing With Little or No Money
Posted: Monday, October 26, 2009
by Jeff Adams
RealEstateWebProfits.com
Before you attempt to qualify for a loan, it is important know what you will need. Having enough money for a down payment is always helpful. The percentage that is put down varies from bank to bank and from loan to loan. Typically, it can range anywhere from three percent to twenty percent of the purchase price of the home or property. It is also imperative that you demonstrate stability. At least two years of steady employment at the same job or in similar or related field shows such financial consistency.
Having all four is ideal, but if you do not have all of the above mentioned criteria, you do still have the ability to invest in real estate. With the economy in the state that it is in today, there are a variety of more creative ways that you can provide financing for your potential deal.
If you do decide to go the more traditional route by getting a loan from the bank, your best bet would be to try for a Low-Doc or No-Doc loan. A Low-Doc loan, also known as a Stated Income loan or a No Income Verification loan (NIV), does not require an investor to provide a proof of income or employment. He/she simply has to declare or state his/her income. Proof of funds is not necessary and verification of income in not necessary.
A No-Doc loan, as its name implies, does not require a proof of funds or a verification of the assets of the investor. This loan is also referred to as a No Income No Verification (NINV). Both the Low-Doc and the No-Doc types of loans are given at times to individual seeking a loan, but much with much more reluctance from the bank. Banks associate greater risk with these types of loans in comparison to those that require all of the usual proof and paperwork. Because of this heightened risk factor, the bank making the loan will usually attach a higher interest rate to the loan.
There are other ways in which an investor can find financing for an imminent investment, if getting a mortgage is not an appropriate option. If you have little or no money to put forth as a down payment, there is always the possibility the seller will be willing to work out a different method of funding the deal. Getting the owner of the home or property to finance some or all of the money needed is a great way to move forward with the purchase. Seller financing is also a valuable method both to the seller and the buyer. The buyer receives the money necessary to make the purchase and the seller now has a greater sense of security.
If an investor is unable to receive financing through a mortgage and the seller is not cooperating in regards to seller financing, there are still options available. Sometimes, just considering your personal connections could be feasible. It never hurts to ask friends and family for a loan. Offering to pay interest at a good rate on the loan is always helpful when pleading your case as to why they should loan you their money.
In addition, an investor also has the option to work with a partner. Enlisting the services of a partnership is another way to fund your investment. Before deciding to involve family, friends, and/or partners, though, it is vital that you also consider the possibility that because these individuals financed the deal that will probably expect to have more of a say as to any happenings and proceedings that will potentially occur on the home or property.
Overall, before shying away from an investment opportunity, any potential investor should always consider the myriad of possibilities that are available. Finding an alternative method of financing can ultimately lead to making a successful deal.
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