How Can You Finance a Real Estate Project?

Investing in a real estate project can be very profitable if you know the right ways to move forward. If you do not possess the substantial amount of the liquid assets, you can consider buying the real estate with the present credit market.

Traditional Method: The traditional methods of financing a real estate project are through credit unions, banks or other mortgage companies. For example, if you want to invest in upcoming residential Prabhadevi in Mumbai, you should be aware of the market rates of this particular place. As the lenders have become stricter, you should be ready with a proper credit score as well as your income statements and debt documents. Some situations may require a certain percentage of the down payment and then only you can be approved for obtaining the finance.

Subject-To: This is a very modern method of financing a real estate project. The name ‘subject-to’ comes from the original phrase as subject to existing financing. In this case, you are actually buying the property without changing the existing financing schemes. Here, the title of the real estate property will get changed, but the loan here remains in the name of the seller. For example, if you are looking for residential projects Mumbai, you can use this method if you are not ready for paying the down payment. You can try refinancing within six months and then get the loan in your name. This particular method can be named as the pre-foreclosure properties. No down payment is required and the seller can get rid of the property in a very quick process. If you are financing the project in this method, make sure you are making the payments on time.

Seller Carry Back: Anything besides the traditional method of financing can be termed as the creative financing. The investors in this case will use a very little amount of own money and much of other people’s money in his project. You are required to find a seller who wants to get rid of the property as soon as possible. This kind of desperate sellers will also never mind getting the payments on the monthly basis. Though the seller can fix a time limit for the payment, it should not exceed above five years.

Seller Second: The phrase ‘seller second’ signifies that the seller can provide a second mortgage to the real estate project. The second mortgage should be large enough for covering the most parts of the down payment. For example, if you are qualified for a loan that requires 10% down payment, you can make the offer to the seller up to 10%. In this way you will get right to use the property without spending your own money. You should ensure that the loan that has been approved allows the second mortgage for attaching it with the loan.

Lease Option: If you cannot find any solution for financing the real estate project, you can consider the lease option. This particular option helps in acquiring the property with little or no down payment. You may eventually buy the property within two or three years down the line. You can also arrange a monthly payment system for the lease amount.

By now, you must have known some of the popular ways of financing the real estate properties. There are many other ways of financing the real estate projects. According to a very old saying, where there is a will, there is a way. If you are determined to buy the property, you will definitely find ways for financing it.

Derek Lawson is a well known real estate agent. In this article, he is providing tips for financing the real estate projects. You can go through the guide on upcoming residential projects before finalizing your plans.