Investment in real estate implies investing in fixed assets, particularly, in buildings.
Real estate investment is a lucrative business having a wide range of opportunities for making good money.
But investment must be undertaken only after acquiring complete knowledge of the business and mastering the tricks of the trade.
If you want to be a real estate investor, you must find ways of securing finance for your deals.
This is the first and the foremost step in the business since, without finance, you cannot take the next step.
Obtaining finance for real estate is not as easy as it used to be in the past.
Its reason being the current recession and the consequent risks that are faced by lending institutions.
Below, we discuss some factors that can help you secure a real estate financing facility with relative ease and comfort.
We will analyze the effect of the recent economic slowdown, ways in which lending institutions have modified their lending procedures, and how you can easily adapt to their present disposition.
Credit worthiness Whenever you apply for a financing, the first thing the lender will demand to know is your credit worthiness.
He will verify your income and also check whether you are already servicing a loan.
If you are burdened with a few loans, he will be reluctant to give you another.
The most basic principal governing credit worthiness of a potential client is very simple: He or she must have the ability to repay the loan.
Location of the property The next thing your lender will look for is the location of the property in which you are planning to invest.
If the property has high market value, it will translate into bigger profits for you and strengthen your ability to repay the loan.
On the other hand, if the property has no market value, it will put you in a jam and you can end up being unable to service the loan.
Apart from the location of the property, the lender will also consider other aspects that might affect your future profitability.
They include the size and the condition of the property and the price you are planning to pay for it.
Risk Factor Default of a customer is the eternal apprehension of the lender.
There are numerous reasons that might culminate in default.
You must assure the lender that no such thing will happen to the financing provided to you.
For this purpose you can present them with your previous debt servicing record.
You must also make sure and convince the lender that there are no risk factors involved in the property that you plan to buy Pick the right lender The lender is the most important person in your real estate endeavor so it is imperative that you select the right one.
The lender must be willing to finance you and you should feel at ease dealing with him.
You must, on your part, be very sincere and co-operative.
Some of the questions asked - and documents demanded- by the lender seem irritating.
They are not.
He is just checking things out and making sure that the facility that he extends to you is a good and secure investment.
If you have completed all the paperwork in advance, and are willing to co-operate with the lender, there is no reason why you should fail to obtain a feasible financing facility for your real estate deal.