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Real Estate Financing: Hacks to Fund Your First Deal

As this article on FDI details, investment into developing countries, including the Philippines, has risen from 22% to 34% over recent years. As explained by this Lamudi article, this has a positive effect on the local housing market which is one reason why property in the Philippines is so popular right now.

However, many would-be investors are put off by making their first deal because they think they need to have a lot of money or real estate expertise.

This is a shame because it is often easier than people think to fund property deals. Here are just some of the many hacks that can give prospective investors a lift up on to the property ladder.

Hack 1: Investing In a Property Development Course

If you are already struggling for funds, it may seem a bad idea to spend your hard-earned dollars on attending a property development course.

However, the best of these courses are run by real experts in the real estate industry and there will almost certainly be plenty of useful information on funding hacks. If you really can’t afford to book on to a full course, consider attending a seminar (many of these are offered free). Avoid the sales patter and just make sure you ask plenty of questions about funding your first deal.

Hack 2: Auctions

Everybody knows that auctions are a great place to get hold of properties at dirt cheap prices. However, auctions are also populated by real estate experts who will wipe the floor with an unprepared newbie.

If you want to try your hand at an auction, the secret is to do your research first and know exactly what a property is worth. Visit the property, look at the neighborhood and find out what other properties in the area are going for. When in the auction room, be disciplined and don’t be tempted to exceed your maximum bid price for any reason.

Hack 3: Owner-Occupying

The value of a deposit is usually a big sticking point when it comes to funding your first deal. And while experienced investors with huge portfolios and glowing credit reports can access the best finance deals, fledgling investments end up paying more – both up front and in higher interest rates.

One way over this first hurdle is to invest in a property you also live in. Owner-occupied properties generally require a smaller deposit so are more affordable this is different to improving your own home for sale because you will be looking specifically for houses that will be in high demand when you come to sell.

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Hack 4: Seller Financing

When a homeowner is particularly motivated to sell (often real estate language for facing foreclosure!) they may be willing to agree to a deal whereby you pay them regular installments rather than buy the property outright. These kinds of deals require careful legal oversight but can work well since the buyer can then let out the property and reinvest the difference.

Hack 5: Partnerships

Would-be investors often have the motivation to research property but lack the cash to get started. On the other hand, there are plenty of wealthy people who know that property investment makes sense but have no interest in real estate whatsoever.

These kinds of partnerships can work wonders with one partner content to sit back and supply the funds and the other using their enthusiasm for real estate to do the research and select the juiciest properties. Some real estate experts started their journey by simply getting paid a cut to research for wealthy investors.

Hack 6: Cash for Structured Settlement

If you have been awarded a structured settlement as part of a legal claim, you may be able to sell it on the secondary market to raise funds for your first property. This is another decision that would benefit from legal advice. The type of structured settlement is important to bear in mind. For example, an unhedged life contingent annuity is likely to be worth far less on the secondary market than a guaranteed structured settlement and a court may be required to assess whether the sale can go ahead.

The above routes into property investing are not unusual. Many of the world’s top real estate gurus took their first steps towards financial freedom in precisely this way.

About the Author:

gp-kathyKathy Manson is a Finance Coach and Blogger. Currently, she is working at catalinastructuredfunding.com. She is very proactive and aware about each and every update of financial changes in the industry. On Twitter @ structuredfund.

 

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