Basic Real-Estate-Investment-Funding

Real-estate-investment-funding and startup funding knowledge will give you an advantage when purchasing real estate.

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Two of the most important financing concepts is the use of leverage and compounding. Use as little of your own money as possible when buying real property. The less money you put down, the more your return on your investment when you resell.

Remember that the more you put down on investment property, the less investment capital will remain. As a real estate investment funding and startup funding strategy leverage can provide the following advantages:

• Leverage maximizes your money’s use.

• Leverage enhances the compounding effect.

• Leverage allows you to control a lot of property with the minimum amount of cash.

• Your average annual return is increased dramatically.

• This OPM (Other Peoples Money) concept assures the largest expansion of cash

Compounding Effect of Using Leverage in Real Estate Purchase.

Leverage is a method that allows you to control properties with little or no money as we can see in the following example. We will take a $200,000 property and assume a 5% rate of inflation. The return of initial cash is expressed as a percent of the amount borrowed.

To take advantage of this leverage, you do not have to have high income or assets. You just need enough credit and the ability to correctly evaluate risks.

Original Property Value: $200,000

Property Value After (5% yearly inflation rate) Amount Borrowed:

0% Borrowed 75% Borrowed

Compounding Effects of Leverage:

1st Year $210,000

5% 20%

3rd Year $231,525

15.76% 63.05% . In real-estate-investment-funding, the larger investor has no inherent advantage over the small investor. Both are on even footing. Real estate wealth based on capital appreciation is likely to continue because all investors are allowed to use leverage, real estate wealth based on long term inflationary trends will continue to increase.

Although some of greatest fortunes have been built from real estate, like all investment instruments, real estate is not immune adversity.Natural disasters – fire, flood, and earthquake – and deflation are two prime examples.

However, properly selected and appropriately timed, real estate is one of the safest investments you can make. For most people it is the single largest investment. As long as the dollar’s value continues to decline and demand increases, real estate will be the primary instrument to hedge against inflation.

Creative Payment Terms

Creative real-estate-investment-funding is the key to success in real estate investing. The power of investing lies not only in finding the bargains but in finding the best “terms”. Many of the best real estate deals include creative terms. Low (below market) interest rate, no interest for a period of time, balloon payments, interest only. principal only payments and many other options can reduce your overall cost. The following points are key to maximize leverage in your portfolio:

• Borrow money at low rates,

• Extend payments and

• Put down the lowest down payment possible. Control as many properties as possible through the use of OPM with the least amount of out-of-pocket cash.

Real-estate-investment-funding secrets revealed.