Leverage is one of the big selling points where real estate investment is concerned. It makes sense why – it allows investors to use less of their own money to acquire valuable, income-generating assets. But, like all things, utilizing leverage comes with risks. While the advantages are significant, every investor must consider the pros and cons and decide how much to leverage.

Buying investment properties is a process. If you’ve ever purchased a home with bank lending, you know just how it is – a complex process of sending, signing, and receiving documents. Then there’s the appraisal, closing, and everything happening behind the scenes.

Some financial gurus will tell you to avoid debt at all costs. And while, as a rule, one should manage debt responsibly – ensuring a high, steady credit score without overleveraging – debt isn’t always a bad thing.

In this moment of low supply and high demand, obtaining a loan for businesses, automobiles, and homes is nearly impossible without a pristine credit report. We’ll get into why, but know this: if credit scores are important for the Average Joe, they’re doubly important for the real estate investor.

Even for a turnkey investor, the act of investing in real estate can be a process. For anyone looking to buy a property, lending is often involved. However, the act of acquiring a loan for an investment property versus acquiring a loan for a personal home can be a drastically different process.

Learn how to get started investing in passive, turnkey real estate investments today with the Top Turnkey Real Estate provider.  Click Here To Download A Free E-Book Detailing Your Steps To A Successful Portfolio!

How to Lend Private Money In Real Estate Successfully

Increasingly, real estate investors are looking for alternative ways to invest their money in the real estate investing game. Portfolios are diversifying, new methods of investing are taking center stage, and it always seems like there’s something new shaking up the market.

This may be a first for us.  We are printing a response we received to an article we wrote on our blog.  Not to mention, we hardly ever print articles written by other people.  But this one is different.  This response was emailed to me from a very valued relationship we have in the lending community.  Kathleen Kramer, of RPM Mortgage, has been a trusted confidant for the past two years and has assisted with private money programs for our company. Kathleen also has reviewed and advised us on our procedures and processes and visited our offices here in Memphis.  We have tremendous confidence in her knowledge of the lending industry, so when she sends us an email response to our recent blog article...well, we listen!  

Some economists and experienced real estate investors think they know and most will not like the news they have.

I was recently in Los Angeles at a dinner with a group of investors and investment service providers and at one point the conversation turned to the current housing market.  The dinner was sponsored by MOR Financial and one of the partners was recounting an advertisement he had heard earlier in the week.  The advertisement was from a mortgage lender and they were promoting a brand new product they had for home buyers...the 5/1 ARM.  For anyone not familiar with the terminology, that is an adjustable rate mortgage that has an artificially low interest rate for the first year and then can increase by 1% each year for the next 5 years.  Traditionally, an offering like this is tied to the LIBOR, which coincidentally has nothing to do with the housing market.