Investing in Real Estate Cash Free

Posted on December 21, 2008
Filed Under foreclosure real estate investing |

Everyone has heard of the awesome profits people have made in the real estate market. Most of us assume that the only way to invest in real estate is to have cash on hand already to play with. This may seem like a common problem but like anything else there are ways to get around a shortage of cash.

The way around this lack of cash is your biggest asset you have already invested in, your home. If you have already purchased your own home you can actually leverage this valuable asset and become a real estate investor before you ever dreamed you could.

If you are a homeowner, have paid you mortgage on time, and have decent credit then you could start investing in real estate sooner than you think. You will likely have a decent amount of equity built up in your home even if you recently purchased it and have been making your monthly payments it is likely it has increased in value creating more equity.

To come up with the amount of equity in your home you take the current balance of your mortgage loan and subtract it from the properties current market value. This number you come up with is the amount of equity you have built up in your home as well as the amount you can get in a loan or line of credit.

There are three main ways to use the equity in your home to get the cash or credit line you need to invest in real estate. You have the ability to refinance your property in order to receive a lowered interest rate as well as some cash on the side. You can use this money to buy an investment property or at least use towards the down payment costs. Always inquire your lender about any rules about cash-out refinancing. Many cash-out refinancing mortgages come with a higher interest rate than other mortgage loans.

Another option is to use your home equity as collateral to receive a home equity loan. This loan is a type of second mortgage to the one you are already paying on and the amount given is based on the percentage of equity in your property. You can borrow up to one hundred percent of your property’s value, but if this is a second loan it is unlikely. This loan usually allows you to pay back the loan early without getting charged a hefty penalty fee.

You can also choose to use your equity to open a home equity line of credit which is similar is many ways to a credit card. The amount you are allowed to borrow is based on the amount of equity you have in your home. You have the ability to transfer money from your own home equity line of credit and write checks that debit money from the account.

With a home equity line of credit the interests rates that are offered are usually much lower that those you would pay on a cash-out refinance mortgage and include other tax advantages. You are also only paying interest and making payments on the amount of money you owe at that time rather than an entire amount of a loan.

Comments

7 Responses to “Investing in Real Estate Cash Free”

  1. PerpetualTraveller on December 21st, 2008 12:38 pm

    Best Way to Invest 100,000 Cash in Real Estate?
    Let's say you have $100,000 cash now. How would you invest it in real estate, get monthly income and still hope it appreciates? What is the most hassle-free, least risky way to do it with the best monthly yield. How much money can you hope to get per month ( max)?

  2. anya on December 21st, 2008 5:40 pm

    in real estate, INVESTING means buying a unit (either lot only or house and lot) to serve as their source of income..like putting up a business(store, mini-grocery,etc) in that lot or opening that house and lot for renting..if you like, i can give you a lot that costs 50,000 dollars only..this is in a very good location..if your interested, e-mail me at amcoronel_hvha@yahoo.com ..ok?
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  3. topgalant on December 21st, 2008 5:42 pm

    Instead of putting it directly into the property… which can demand a lot of your time and the rewards aren't always all that good with such a small amount to invest… check out the type of mutual funds called REIT (Real Estate Investment Trusts).

    There are some excellent trust funds and they all pay 6 percent or more on your investment.

    TALK TO YOUR BROKER and get his/her recommendation.

    I just bought $100,000 in a fund named "Hines REIT". It's a big fund that specializes in Commercial Real Estate world wide.

    Ask your broker about it and have him get you a perspectus.

    Good luck
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  4. CHARITY G on December 21st, 2008 5:44 pm

    Don't invest in real estate right now. Wait about a year. The sub prime mortgages are just starting to go into default so full depreciation has not occurred. Also unemployment numbers are starting to rise which will only further the crisis. I've been hoarding cash as well and am waiting (gleefully) for the blood bath to materialize. Hold off about a year - then go for it. Believe me, you'll be glad you did.
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  5. stephanie k on December 21st, 2008 5:46 pm

    Bury it in the backyard.

    http://www.whomakesmoney.com
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  6. bigoilman on December 21st, 2008 5:48 pm

    Investors are always looking for sources of funds. Contact a local REIA group. Most will gladly pay you 10-12% on your money (I will!) and secure it with a first mortgage on the property. Get the details on any potential deal and put your money in the deals you like.

    I need an investor like you right now on a waterfront house that I can buy at 55% LTV!
    References :

  7. John L on December 21st, 2008 5:50 pm

    Do surveys make some money it's easy, simple as that, here's the link:

    http://www.cashlagoon.com/?ref=9493
    References :

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