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Sources of Real Estate Investing FinancingThe government has a real estate investing financing program under HUD. The U.S. Department of Housing and Urban Development (HUD). The 203k Rehabilitation Mortgage is a program in which homeowners can get $35,000 to improve their home before they move in. This is an FHA program under HUD that allows for the repair of single family properties. HUD also has a 203b program that provides mortgage insurance for a person to purchase or refinance a principal residence. Both of these programs will be beneficial for those folks who don't mind moving into a house they purchased that will be fixed up for them. This is an excellent opportunity to take advantage of 2 scenarios. First is the available financing opportunity. The second is actually another piece of Real Estate Investing Information that is very applicable at this point. The 1997 Taxpayer Relief Act offers a huge tax break for homeowners. If you lived in your home for a total of two years out of the last five of ownership, when you sell that home, you are eligible for a $250,000 capital gain exclusion. This is perfect information in conjunction with using government real estate investing financing. Here's a perfect combination of real estate investing strategies and real estate investing information. TRY THIS!!!!!!1. Purchase a cheap foreclosure.2. Use the HUD 203 loan programs to purchase and rehab it. 3. Live in it for two years. Rent it out for the next three. 4. Finally, sell it. What have you accomplished using the government's real estate investing financing? First you get the capital gains tax exclusion which means you don't pay Uncle Sam on the proceeds of the sale of your home. Second, you were able to live in a totally renovated home that you bought for a very cheap price. Finally, you turned it into a rental property and received three years of passive income on it!!! Mortgage LoansMortgage loans are either government sponsored or conventional. Government loans are known as FHA, VA or RHS. The Federal Housing Administration (FHA) is a part of HUD. At various times, the FHA will offer different types of loan programs and incentives to increase home ownership and improve neighborhoods through revitalization programs.The U.S. Department of Veteran Affairs offers loan guarantees (VA loans) to military personnel with substantial terms and easy eligibility requirements. The VA does not actually make the loan. A lending institution does this. The VA just issues certificates to service personnel for the procurement of a loan. Finally, the U.S. Department of Agriculture's Rural Housing Service (RHS) also guarantees loans for rural residents with minimal closing costs and no down payment. Conventional LoansConventional loans are either fixed or variable. Traditional loans are either 30- or 15-year. Other loans are balloon loans because after a set period, 5 or 7 years for instance, they have a final large lump sum payment at the end of the term.Unconventional LoansUnconventional methods of real estate investing financing include hard money loans, private lenders, and credit cards.I have used all types at one point or another. Each has its benefits and drawbacks. A) Hard money loans carry higher than normal interest rates. However, you don't have to go through extensive documentation to qualify for them. B) Private lenders might require greater returns or a minimum loan amount to fund. The benefit is also that you don't have to go through a lengthy qualification process. Some don't even care about your credit score. C) Using credit cards is a somewhat new real estate investing financing option. But you can certainly utilize those "free" checks that they send to you periodically. Why not use them for real estate investing as opposed to go shopping for perishables. It makes total sense to me!
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