There are two things of significance that have changed in the world today, we have a new president and investment property has become a virtual mine field of denials. In almost 24 to 36 months the “Yes” has become an undeniable “No” to any real estate financing, not just the risky type. Gone are the days when you could march into any major mortgage bankers office, sign a couple of papers and walk out with the loan amount that will get you your real estate investment without jumping through a single hoop. Maybe he hoops should have been there but this is not what I am going to focus on.

Now, however, in this bad economy, obtaining the needed backing is more challenging.  I have good news for you, I am about to share with you tips that will help you on this task.

The 1st tip I would like to share with you involves you saving up for a good deposit to put as a down payment. The stagnating economy makes this a very difficult feat to accomplish, but it is critical for securing money for your commercial or personal real estate.

Improving your credit score comes a close second in line.  There are many ways for you to improve your credit score.  You can start by paying all your credit cards on time every month.  It is also wise to not open any new charge accounts at this time. This approach could actually lower your credit score rather than raise it.  Although you may think it would be beneficial to close unused credit cards; in fact, it is the opposite.  By closing unused credit cards, you could lower your credit score which would not be beneficial for financing investment properties.

A third tip in helping you obtain backing for your real estate endeavors is developing a great relationship with your local bank.  When I say local bank, I mean a small bank if possible because many small local banks have been able to weather the storm of this recession.

A 4th tip to financing your investment property in this down economy that I would like to share with you is to tap into other financial resources other than traditional banks.  Seller financing is one option you could look into. Mind you, this will only work if the seller is not the bank. Typically, a motivated seller will work with you because they have a need to unload their real estate. 

If the investment property is in need of significant work, you may be able to find a hard money lender that can give you a loan. 

Another alternative for financing investment property besides a bank includes a private money lender.  These lenders have plenty of cash; some with self-directed IRA’s. 

The good news here is that the investor with the self-directed IRA can actually be your bank so to speak. This type of lender may request some portion of real estate ownership or perhaps request another type of arrangement. 

Either way, it may be a good alternative.

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