Miami Real Estate: Investment Loans

A loan on secured by Miami real estate collateral is typically known as a mortgage. This is the most popular form of real estate investment loan used by investors. Miami real estate investments provide an opportunity to generate cash flow. Apart from commercial banks, savings banks, savings and loan associations, credit unions, real estate investment loans can also be obtained from insurance companies, mortgage bankers, mortgage trusts, investment trusts, pension funds and finance lenders. Private individuals sometimes offer real estate investment loans as well.

There are two types of Miami real estate investment loans, namely, residential loans and commercial loans. Property that is solely used for business purposes like malls or industrial parks would be termed as commercial real estate. Commercial loans include buildings, warehouses, and stores. These properties are generally five or more units. Property that is solely used for single unit housing purposes is termed as residential real estate. Residential loans include those properties that are bought for rental income and future appreciation. The borrower initially receives a lump sum from the lender, which has to be paid back in installments. Purchasing a Miami real estate residential property involves having significant funds. Before qualifying for an investment loan, three main factors are considered: investor’s income, credit scores and reserves. In order to qualify for a loan, there are five basic essentials: interest rate, terms, payment, final value and principal. Loans can carry a fixed interest rate or rates that vary with market conditions. Some loans have negative amortization periods; investors should be cautious of such loans.

Miami real estate investment loans comprise of interim loans, short-term loans and long-term loans. Apart from commercial and residential loans, the other types of loans that are offered are construction debt, permanent debt, equity financing, structured financing, interim financing, mezzanine financing, foreclosure investor money, hard money loans and residential repair funding.

Investors may not need perfect credit scores to qualify for real estate investment loans. Bad credit real estate loans are designed for those individuals who have a less than perfect credit report. It is a type of sub prime mortgage and is a higher risk to the mortgage lender because of the past credit history of the borrower. Bad credit loans allow individuals to obtain a mortgage for buying real estate when other more conventional mortgage lenders or banks may have turned them down.

The longer the tenure of a loan, the higher the interest rate will be. A 30-year fixed loan will have a higher interest rate than a 2-year fixed loan. But people generally opt for a loan with a shorter-term fixed option, as the rate of interest is lower and hence the monthly payment is lower. To get a loan there are no pre-determined limits set for the real estate investor.

Some Miami real estate investors tend to prefer in marketable real estate assets. Buying shares in a real investment trust or REIT is one way to do this. Investment loans can be used to partially fund such investments and the REIT shares are used as collateral to secure such loans.

Present-Day Investment for Future Security

If you are looking to invest for the future, invest in a house. With real estate prices not looking like they will fall in the near future, it is a good idea to put your savings into buying a house. You never know what tomorrow might bring, and if nothing else, a house provides a feeling of safety during the tough times. Moreover, it is a good feeling to have a place to which you really belong. No matter how much at ease you feel in that rented apartment of yours, you will have the subconscious feeling that you will have to leave the place someday. The owner, after all, is not you but someone else.

You will always find me advocating the benefits of real estate investments. We all spend so much money on rent every month anyway. So why not summon up a little more and invest that in some lucrative property? Not being able to afford a house cannot be an excuse anymore. This world that we inhabit is brimming over with loans, mortgages and more loans and mortgages. No matter how limited your budget, there is definitely a loan or a mortgage that will suit you best. All you have to do is make up your mind what kind of a mortgage loan you are hoping to find.

Does the idea of a fixed rate mortgage appeal to you? Or would you prefer a mortgage with an adjustable rate? Are you intending to repay the loan over a long period of time? Or are you hoping to get a loan that permits you to do prepayment?

Once you have decided on the mortgage loan that you like best, all that remains is to go and unearth the house that you would like to invest in. Having bought the house, you will probably be feeling overawed by a sense of achievement. But now, you are probably a little broke and it may be time to mull over how this house can be made to work for you.

One great thing about owning a house is that you can go in for secured loans keeping your house as collateral. Such loans are less difficult to get, and they require you to pay much lower interest rates than unsecured loans of the same amount. Then again, if you are still in the process of repaying mortgage, you might consider releasing the equity on your home to avail of loans to fund other expenditure. If you already have another house, you could rent out the new place. If you are intending to sell the place after a given period of time, doing a bunch of home improvements will definitely raise the worth of your house. Whether you own a home or not, there is no doubt that real estate is a great place to invest.

Hard Money Home Equity Loans: Understanding Bad Credit Loan Consolidation

Hard money equity loans in the prevailing market are loans at a premium mortgage rate to the borrower in exchange for a “no red tape” 2nd mortgage loan. The money may be used by the lendee for whatever purpose they chose so long as the equity in the property or collateral provided is sufficient to cover the loan.

The term hard money loan initially meant a loan for hard cash. Today the term has been enhanced to cover loans for non-conventional loans such as investments, private funded loans, home equity loans and equity line of credit loans. Now it is possible to refinance your primary mortgage to get cash, consolidate debt and purchase investment properties instead of a taking out a purchase loan as a non-owner occupied investment property.

A maximum loan on property owned by the borrower is called a cash out loan. The borrower has a loan to value, which means the loan on the property, or collateral used is equal to the value of the property or collateral used to secure the loan. This type of loan has a higher interest rate than the “A paper” home equity loan that has a fixed rate around prime.

A home equity loan is one type of loan available for a hard money cash out loan. The Payment option negative ARM is another good 1st mortgage for investment properties if the borrower is looking for a short-term loan or if being self-employed has created some cash flow concerns.

A negative ARM mortgage calls for the payment of interest only on the loan. If the interest for a period is not paid in full the balance is added to the mortgage. The end result is an increased mortgage balance and a loss of equity in the property used for collateral. As the mortgage balance increases, the interest on the mortgage loan increases even though the interest rate remains the same. If both the loan balance and the interest rate increase, the property owner may be forced to sell or the loan may be foreclosed.

A home equity lender may require all or some of the following items before making a hard money loan.

1. A clear precise description of the property

2. Home Title to collateral

3. Borrower must show expertise in the field the loan will be used in

4. Mortgagor must accept all lender terms unconditionally

Because the interest rates are higher, and state laws may vary, borrowers should examine all ramifications before considering hard money loans.

How To Choose A Good Investment Property Loan

Real estate investment is generally viewed as a lucrative career opportunity. But purchasing investment property does require a significant financial backing. Nowadays, however, the funds required to embark on a real estate investment career are easily accessible to many people in the form of an investment property loan. Therefore, you may begin investing in real estate, even if you are on a shoe string budget.

Investment property loans can be broadly classified into two categories, namely residential and commercial. Residential loan is associated with those investment properties whose predominant use is residential, and that are purchased for future appreciation and rental income. On the other hand, commercial loan is acquired for the purchase of apartment buildings (with 5 or more units), warehouses, or stores.

An investment property loan can be obtained from several sources, including banks, financial institutions, credit unions, and private brokers. These lending institutions analyze a borrower’s credit score, income and assets, in order to determine if he/she is a viable candidate for an investment property loan.

A multitude of real estate investors in the US make use of an investment property loan to acquire real estate. Doing so offers them a twofold advantage – they can enjoy the benefits of capital growth and tax deductions. Though the escalations are not anywhere near the boom of the late 1980s, property value does appreciate on a gradual basis (capital growth). Another significant benefit is that offered by “negative gearing”.

Gearing, in essence, refers to borrowing in order to invest. A negatively geared investment property is one that is purchased using borrowed funds and where the income (after expense deduction) from that investment is less than the payable interest in the course of a year. This allows a significant tax benefit for investors, as they may deduct the expense of owning an investment property (especially the interest on the investment property loan) from their taxable income.

Investment property loans come in various shapes and sizes, as per the requirements of investors. They are offered as interim, short term or long term loans. Needless to say, you must ensure that you are well aware of the terms of the loan, such as the interest rate, the time period of the loan, and the payment schedule.

In a gist, newbie investors need not have plethoric amounts of money to set out on a career in real estate, since property investment loans offer a great opportunity for them to get their feet wet in real estate.

Real Estate Investing – Creative Approaches

In times of current crisis, making money has become quite difficult. Though real estate sector is most badly hit, still there are opportunities available for making good money in this area provided that you apply some creative methods of investing. More and more people are opting for the real estate industry regardless of the difficulties and challenges tied to this pursuit. The most pressing aspect of investment is how to invest smartly? How to gain profits by making use of whatever resources you have?

There are some creative ideas listed below that might help you launch into the real estate game

Investing in Home:

In the past, homes were bought only for personal usage. Nowadays the notion has, somewhat, changed. Homes are being bought and sold for investment purpose also. Buying a home does not only allow you to own a house, it also adds a valuable asset to your credit.

Moreover you are at the liberty to make use of your property in any way you deem fit. One of the creative ways for generating income from your property is to go for Lease options. A lease can provide you with extra income, simultaneously you can also have the satisfaction of providing roof to people who cannot afford decent housing. The actual cost of the property can be collected from the rentals. A step further in this direction is the rent-to-own option which can enable you to buy another property or make extra money from such a deal.

Investing in Other Venues:

Apart from investing in home, there are other creative options available for investing in real estate market but all of them need procedural approach and careful planning. Before going for any of the accessible options some steps must be taken in order to succeed in the real estate game. Some of those steps are listed as under:

  • Searching and locating: The first step is to locate the right property for your real estate endeavors. For this purpose you should socialize with real estate investors and freelance real estate agents. It will keep you informed abut the possible venues for investment. You can also visit a perspective location in order to familiarize yourself with the area so that you can have a calculated guess regarding the prevailing price of properties in a certain surrounding
  • Analysis: Analyzing the situation and formulating tactical procedure for creative investment is the key to success in the real estate game. A careful analysis includes ascertaining a realistic price of the property, availability of feasible loan and determining the resale value of the property. You must also consider other options like renting or leasing the property to potential customers.
  • Getting hold of the Property: When you are satisfied that a certain piece of property is a good investment you must, then, proceed to the next step which is acquiring the said property. There are certain agreements that need to be prepared for the acquisition of the property. Since these agreements are legal documents I will advise you to take help from an attorney since he is familiar with legalities of buying and purchasing. He is also familiar with the local and federal laws and can be very helpful.
  • Assessment: Once you have the possession of the property, you should assess the sum of your assets and liabilities as well as expenditures incurred in the undertaking. Once you have reached such an assessment, you will be able to devise your strategy with clarity of mind.
  • Marketing: Marketing is the backbone of any business. Common marketing strategies include advertising in newspapers and listing on popular websites. You can also socialize with people who know the pros and cons of the real estate business. Social networking is the most effective way of marketing your property as well as gaining valuable experience in your chosen field.
  • Devising deals: A successful deal is the one in which every party gains something. Devising such deals is the real challenge in investment. Get your property evaluated by a professional evaluator and then take a stock of all the deals that you can offer on your property. Select the one that seems best and then offer it to potential buyers.

Real estate is a very lucrative business if you are willing to put some extra efforts into researching, planning and devising the mechanics of this business.