The main aspect of any real estate transaction is money and how to get a investment property loan.
The arrangement of money, from any possible means in order to complete a real estate transaction is called real estate financing.
Any successful; real estate deal hinges on financing since it is the most important aspect of the deal.
Financing is seemingly a simple word but it is anything but simple.
It involves equity and assets allocation as well as fund management for transactions.
Nowadays, most people are pressed for cash.
Thus finding money for a real estate transaction has become quite difficult.
If you do not have ready cash for a transaction, you need to arrange money for the same.
For that purpose you must secure a financing facility for your deal.
This is the first step of any real estate activity: securing finance.
The next step can only be followed if this step has been successfully achieved.
In order to secure finance for your real estate deal you must keep certain things in mind.
1.
Credit worthiness: You must have an impeccable credit history since the lender will shy away if he comes to know that you have been defaulting on your previous loans.
If you have a bad credit history, don't bother to apply for a financing facility.
If you have a good credit history, the next thing he will look at is your credit worthiness.
In order to calculate it, he will take into account all your assets and liabilities plus your incomes and expenditures.
Make sure that you meet the criteria of the lender to whom you have applied for financing.
The current crisis has made them quite weary of handing out loans to people who, in their opinion cannot pay it back.
2.
Cash flow: before the lender sanctions you a loan, the lender will try to ascertain whether you can afford to pay the monthly installments without adding intolerable burden to yourself.
This is where cash flow comes in.
For this purpose you must have a feasibility plan of your property showing continuous cash inflows.
You must satisfy him regarding the future cash flow from your proposed property deal.
3.
Feasibility of the proposed plan: If you have presented the lender with a commercial real estate deal, he is sure to gauge its long-term feasibility because if the business is not profitable, you might go down - and take his money down with you.
The lender is extra-cautious regarding this since it's his money that is at stake.
Check the feasibility of the plan before presenting it.
Also keep in mind that the lender is a professional and he will be looking for loopholes.
It's better if you seek them first and get rid of them before the lender.
4.
Assurance of future payments: The lender needs assurance that he is not throwing away his money.
You need to convince him that you will pay the mortgage on time plus any taxes or such amounts that need to be paid to the regulators.
Of course, he will also look at your credit history and check out your credit worthiness.
Nevertheless you need to convince him of this with words also.
If you keep the above factors in mind, there is no way you could fail in securing finance for your deal.