The first thought of a person who is interested in investing in the real estate business is nothing, only the money he or she is going to need. Most new entrants or investors think that they should have plenty of money with them before they start looking for the property to invest in. Fortunately, that is the case all the time. In fact, most of the professional or successful people in the real estate market never have the hard cash as you might think. They usually start with the money they could arrange whereas some just explore the market and business until they find a profitable deal after that they find sources to get the money.

The most used method or we can say a trick of real estate investment is not investing the money in the hand but how you manage to leverage it.

1. Hard Cash Loans

Hard money loans are often given by the finance companies or the individual investors that need no pre-process for approval. It is a kind of short-term loaning. The lenders give you money and they follow a way of getting it back quickly. It might include rehabbing or building a house.

Also, the interest of loaned money will be fixed by that particular company or investor who lends you money. It will be bound legally.

These people never consider your credit and debit unlike the banks do. The guaranteed property can be anything that has equal or more value than the amount you lent.

2. Financing

What will you do when you can make the bank approve your loan on time? It is the most expected situation that every buyer once in a lifetime faces. This is what leads them to finance companies. The idea of financing is the sellers provide the credit to the potential buyer for the purchase amount of property with a guaranteed note. This guarantee statement explains the terms of conditions, and agreements, like paying back the loan and interest rate. The agreement is less than five years with a balloon payment. The idea is to make the buyer pay back the money to the seller within five years to avoid balloon payment.

3. Construction Loan

It is not similar to a mortgage. Compared to a mortgage construction loan is short-term and puts high-interest rates to comply with the expenses of rehabbing a house or building a house on the property. In this, the person having a loan pays back the money to the contractor working on that specific property instead of to the lender.

4. Conventional Mortgages

Conventional mortgages are not approved or insured by the Federal Government. If you are decided to opt for conventional mortgages, you should have a minimum of 3% of your property’s down payment with you. It also recommends a credit score as high ad 600 and above. These conventional loans are suitable for buyers who have strong financial standing and have a down payment in hand.

5. FHA Mortgages

If you are buying your first home and have less credit score, an FHA loan is for you. You can get the loan even if you have a low down payment and a credit score of 550s. It requires less than conventional mortgages, so you can get your property. These mortgages are insured or guaranteed by the Federal Housing Administration which tells you you should have to pay the mortgage insurance.

The down payment FHA requires does not have to be in the bank account, it can be from family, or a gift from someone else.