Invest in Profitable Property with Real Estate Investment Loan

Investing in real estate can be profitable if right investment is made. Along with this fact, it is also true that it involves huge investment which might not be possible for a person to arrange whole amount of his own. Definitely, he may need some financial assistance which is provided by the financial market by means of real estate investment loan.

Real estate investment loan is generally taken to invest in the commercial property. So, while availing loan the person must make sure that the property in which he will be investing is worth.

In order to avail competitive rates in real estate investment loan, it is compulsory that the lender must get satisfaction in regard that property is sound income generating property. Such income generating property gives the lender, an assurance that timely repayment will be made.

Real estate investment loan is secured loan in which the property itself (in which investment is to be made) acts as collateral against the loan amount. In this deal, the paper of the property remains with the lender till all the repayments of loan are made. So, the person must be careful while making repayment because if he fails then the lender can seize the very property in order to realize his payment.

The amount which can be borrowed in real estate investment loan depends on the value of the property. Other than the value of property, there is another factor also which affects the decision of the lender in regard to the approval of the loan amount that is good source and flow of income. In other words, the people with good income are always offered with competitive rates and also they can avail larger amount of funds. Commonly, real estate investment loan ranges from ₤100000 to ₤3000000. And, they are repaid between 10 to 30 years basically; it depends on the amount being borrowed.

As said they are secured loans, thus carries very competitive rates. Here, risk of the lender is also almost negligible as it is secured against the property itself, so, the lender doesn’t think on the matter, to provide a loan to one who has bad credit score.

Many lenders are present in the physical market who offers real estate investment loan on competitive rates. Other than lenders in the physical market, there are various websites and online lenders who offer such loan.

Before entering in the agreement of real estate investment loan, it is obligatory to under go each and every term of the loan in order to avoid an undesired situation. And, lastly in order to avail competitive rates in real estate investment loan, comparison and research is obligatory.

5 Reasons Why You Must Invest in Real Estate

To someone new to real estate, it may seem as though there is a small but devoted group of people who passionately believe that real estate is the best investment out there. And yet when you look at the statistics, only a relatively small portion of the investing public invests in real estate-most investments are in stocks, bonds, certificate of deposit and their derivatives such as options and future contracts.

Why is it that real estate investors believe so passionately in their investment vehicle? landed property offers advantages over almost all other investments of such a magnitude that when you understand them, it is difficult to get excited about any investments other than real estate. These advantages can be categorized under the following headings:

1. Leverage: When you buy stocks, bonds, certificates of deposit, treasury bills, or most other investments, you have to put up the purchase price in cash. Some sophisticated investors manage to buy stocks on margin, but this only applies to a relatively small number of stocks, a limited percentage of their worth at acquisition, and a limited number of investors. Most stock market investors put up the entire purchase price in cash. This contrast with real estate, where most buyers get a mortgage, be it for an owner occupied home or an investment property. Consequently, a $50,000 lump of cash will buy exactly $50,000 worth of stocks for most investors, but easily $500,000 worth of properties for real estate investors. The effect of this leverage is that gains/losses are magnified through this leverage or gearing.

2. No Cash Requirement: Related to leverage is the reality that even if the bank only gives you 90% or even 80% of the purchase price in the form of a mortgage, you do not necessarily have to come up with the difference in cash. You may easily negotiate a seller-carry-back loan (sometimes called vendor-finance), used equity in another property, arrange a second mortgage effect improvements between signing the contract and closing that increased the value, or implement any of a number of other techniques to enable you to acquire real estate without having any money.

3. Buy Below market value: Most investments have standard market values at any point in time, and efficient market to buy and sell such investments. Therefore, properties may be sold at their true market values (many are), but many properties are sold at more than market value (the buyers pay too much) and by the same token many properties are sold at way below market value. Thus, with real estate, you can consistently acquire assets at way below their true market or appraisal values. This is a tremendous opportunity to instantly gain huge amounts of equity for the mere effort of looking around.

4. Improvements: When you buy stocks or bonds, what can you possibly do to increase the value of your investment other than hoping and buying as many as the products and services as the companies produce? With real estate on the other hand, there are countless things you can do to increase the value way beyond the cost of the improvements.

5. Capitalizing On Gains: When your stock portfolio, gold or most other assets double in value, in order to benefit from that increase, you generally have to sell the asset, or if feasible at least, a portion of it and then suffer the capital gains tax consequences. When your real estate doubles in value, you do not have to sell at all. You simply go back to the bank and refinance. By refinancing, you retain the asset which is still going up in value and which still generates an income indexed for inflation.