Let’s visit a few ways you can find funds to complete a real estate deal. What about those retirement accounts that aren’t performing as well as you would like? Sometimes the stock market is up, but by the time you get done celebrating it is down again. As you advance in years you may start to seriously think about whether you are going to have enough saved to live a comfortable life when you retire. You can self-direct the money in your IRA, 401(k), or even RRSP (Registered Retirement Savings Plan in Canada), and use these funds to invest in real estate.
Note that it is extremely important for you to consult an experienced administration company that understands the laws and tax implications of self-directed accounts. Some sites you may want to research are:
The economy will continue to have its ups and downs, as will traditional savings, but people always need a place to live. Rents stay the same or even increase when home prices drop. Isn’t that interesting? So once you have a self-directed account collecting rent, you are pretty darn secure. That feels a lot better than being at the mercy of what the next election results may do to your savings.
Banks have tightened up their lending, but it is still possible to get traditional mortgages on investment properties. If your personal financial situation is good, you have the option of mortgaging your investment homes. Most banks follow the guidelines set by Freddie Mac and Fannie Mae, those big government agencies in the sky. Therefore, the number of traditional mortgages you can hold is limited.
A good mortgage broker is your best guide. You can likely find a knowledgeable broker at your local REI Club. The cost of getting the loan and paying it for a few months can be greatly outweighed by the profit made in reselling the renovated home. You can also get a mortgage on a property you intend to hold as a rental. Just be sure you are netting more each month than the payment and other holding costs.
There are literally tens of thousands of banks and credits unions in the U.S. The smaller financial institutions (those with one to five or so branches) have more options for investors. These local banks have portfolio loans that are kept in house, meaning they make their own loan decisions over muffins and tea. They are not bound to follow the guidelines set by Fannie Mae and Freddie Mac. Go in and talk to these nice people. See what the possibilities may be.
Lack of funds should not be a roadblock. Think in and out of the box and you will discover sources of funds you may not have previously considered.