Buying real estate is something that successful investors do to generate a stream of income and reap the benefits of long-term value appreciation and tax deductions. But investing in real estate usually requires funding assistance.
Sources of Real Estate Funding
Real estate funding can come from many sources including banks, credit unions, or institutional lenders that offer traditional and commercial loans. Loans can come from private lenders, venture capitalists, angel investors, hard money lenders, and money partners. Additionally, funds can come from crowdfunding and from personal sources such as Home Equity Loans and personal sources. A sometimes-overlooked type of funding is a real estate line of credit.
What is a Real Estate Line of Credit?
A real estate line of credit is a simple financing option that allows an owner of real estate to tap into a property’s equity, thus providing fast access to cash to fund other projects. A line of credit can be drawn-from multiple times and can be used for multiple projects.
The pros of a real estate line of credit include getting fast access to cash, having a long repayment term, only paying interest on the amount drawn, a lower interest rate compared to other financing sources, tax benefits on the interest paid, and no prepayment or early exit fees.
The cons include having a lower loan-to-value compared to other financing options, some limitations on how many units a property can have, and it typically requires a high credit score to qualify.
How to Qualify for a Real Estate Line of Credit
Take these steps to qualify:
Choose the right line of credit which will depend on the property type or portfolio of properties.
Gather the required documentation, including bank statements, and tax information.
Complete an application.
Receive approval after the application has been reviewed.
Draw on the approved line of credit.
Seek Expert Financing Assistance
Contact Lode Capital for financing made easy. We offer a wide variety of customized financing options that are critical to your success.