Finding your new home is one thing, but paying for it the other. There is an array of options for your big-time purchase. Finding the right financial option for your situation is important for funding your investment. Here is a list of options to consider when finding the best fit for you.
Cash is key. This is the most simple and straightforward way to purchase your home. No debt, no problem. Although this is the most ideal option, it is not possible for many people. You may also consider renting your property. Yes, you may be dropping a majority of your savings account all at once, but you can collect a return on investment for your property. This can be a money-making option.
Business credit cards are another great option to consider for funding your investment. Business credit cards with 0% interest will save you on your investment.
What is private money? It is considered the money you receive from family, friends, etc. If your relatives or friends are wealthy and kind enough to be your own personal lender, you can avoid the hassle of dealing with mortgage rates. Since private money is not regulated, you have the freedom to make your own rules and contracts as needed.
- HELOC. If you own your primary residence, using a HELOC is a fantastic way to access cash to purchase a rental property. A HELOC allows you to take out a line of credit based on the amount of equity in your home. This can also be done on existing rental properties. Typically, a HELOC is a great bank product, and it’s accessible to many people. Here’s how to use your HELOC as an investment tool.
- 401k. If you have a 401k through your employer, your plan likely allows you to take out one loan per year. This is a fantastic strategy, because you’re in essence, paying the interest back to yourself. You can learn more about this strategy here.
- Self-Directed IRA. A self-directed IRA is a retirement account that allows the owner control over where their money performs. Being strategic within a self-directed IRA allows the investor many possibilities, including investing in real estate! We’ve put together a comprehensive series to help you implement this strategy.
- 1031 Exchange. If you already own a rental property that doesn’t perform as well as you’d hoped, a 1031 exchange might be right for you. To learn more, read our 1031 exchange guide, and check out our 1031 page if you’d like to move forward!
- Hard Money. Hard money lenders are like bankers, but because they are not regulated by the government, they can set their own rules and lend with looser standards. They don’t care as much about your credit score and they don’t limit you to one investment at a time. They lend on the merit of the deal and they can close funding much faster than a traditional bank.