Investing in real estate can drain all your money if done blindly. Investing in real estate will require you to have good money which may not be available at the time. Accessing the capital to buy that plot you want can be challenging.
If an investor is looking for borrowing a loan, the process itself can be tiresome let alone the time it may consume you. It is not easy accessing capital to purchase a piece of plot or land due to the exposure that the lender of the loan is exposed to.
Access to finance has been the biggest challenge facing real estate investment compared to other challenges associated with real estate investment. It is important for an investor to be smart and know how to play around with leverage to build your investment portfolio.
If an investor is short by a certain amount of cash to close the deal, an institute can advance you a loan to complete your property. This often applies to house property because it automatically becomes the collateral against the loan. However, this may not be the case with purchasing cause unlike a house it is mostly discouraged by banks when borrowing loans. These are the measures you can take for this case,
Land fundamentals
Each property in real estate has basic facilities that matter the most and lenders consider them as well. This is why it is important to know the size of your property, the location, and the restrictions if any. This can be done with the help of a certified surveyor.
He or she should be able to know if the property has restrictions that can prevent the development of your property. Access to roads, electricity, and water and sewer systems should be put into consideration to save you money and avoid unnecessary spending.
It is advisable to work with an experienced agent or a trusted real estate company that deals with the same.
Purpose of the land
Banks tend to demand lower down payment if you are planning to immediately occupy after the acquisition with the intended purpose. This is because they can project the timeline of the project. The interest rate is also lower. However, if it is for speculation, the down payment is usually 50%, this is due to the risk which the lender is facing.
For vacant land financing, consider the following.
Seller financing
This is offered by some of the real estate companies, whereby you as a buyer are allowed to own a piece of land with a certain amount of deposit, usually, it is 10% of the original price. Informally, the seller acts as a bank. However, the title deed is issued after you complete the payment.
Local banks and credit unions
If you are looking for a place with friendly terms, then you should look no further. Local banks and credit unions mostly known as SACCOs are the most advisable. They have friendly interest rates.
Real estate attracts different interest rates. You should choose which is pocket friendly to you.
