There are many options available to the real estate investor looking to purchase a residential real estate property as an investment, including, but not limited to mortgages, home equity lines of credit (HELOCs), grants, seller financing, micro loans, and retirement funds.
Unlike securities investments, which can be purchased in increments of as little as $20.00, real estate property investments are significant purchases, ranging from a few thousand dollars for a parcel of land to tens of millions of dollars or more for Class A office space in a central business district. The vast majority of investors do not have the cash on hand to cover 100% of their real estate investments outright; most are purchased with leverage. Real estate investment loans can come from a variety of sources, and be structured in at least as many ways. Itâ€™s important to understand these sources and terms if you are considering investing in multiple properties to ensure that you meet your financial goals. Further, there are ways to increase your investment yield through creatively structuring your loan terms. Some successful investors, even those with the cash to cover their real estate investment cost completely, have made sizable purchases with minimal cash outlays â€“ sometime even with zero dollars down. This is a technique known as OPM, and refers to using Other Peopleâ€™s Money to make your investments and profits.