Non-Traditional Investment Property Financing Sources

Locating investment property financing might seem difficult at times. If you are consistently being turned down by traditional lenders, it may be time to look at non-traditional lending methods. While it might seem impossible at times, you can still find the financing that you need. Sometimes, it just requires that you look in some other places to find it. Here are a few of the better non-traditional ways to finance investment property. 

Seller Financing

One often overlooked method of getting the money you need is seller financing. With seller financing, the seller will allow you to pay them for the property over time. The loan may still stay in their name and you just make the payment for them. This is a great way to avoid mainstream lending as it is done between private parties. You can negotiate all of the terms of the seller financing with the seller. You can negotiate the interest rate, the length of the loan, and the payments. This option presents you with a lot of flexibility and no need to have stellar credit. Sellers that are desperate to sell will often offer seller financing upfront. Even if the seller is not offering it, you could ask them if they would consider it. Many times, on hard-to-move properties, they will be more than happy to accommodate you. 

Private Investors

Another alternative source of financing is through private investors. Private investors can provide you with the cash that you need without having to worry about the traditional loan approval process. Private investors are looking for a higher than average rate of return on their investment, however. This means that you will have to be prepared to pay a little more for the loan than you normally would. Although when you are being turned down by traditional lenders, it should not be much of a problem. You will still be able to get the money that you need and buy the property that you want.

There are many different ways to use private investors. You could get partners in your deal that want to be cut in on the profits. They will put up a specified amount of money and be involved in the deal throughout. This is also sometimes called equity financing, as you are selling a share of the future profits of your company. 

Another method of private investment is to just get a loan from an investor. In this type of arrangement, the investor will give you a certain amount of money and expect a certain rate of return. You will make payments to them until the balance is paid back. With this method, you will get to keep all of the profits from the investment once the loan is paid off. 

With private investors, you have to make sure that you are dealing with reputable people. Especially when you are getting partners, you want to make sure that you can work with them comfortably. Otherwise, you could run into problems in the future. 

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