Real estate investment can be made easy by using the IRA funding. Self-directed IRA is a safe funding option for real estate investment whereby one can avoid penalties. Besides, one can opt for other funding options such as private lending. 

Real Estate Investment: Various Ways to Fund Your Deals
Cash is the lifeblood of real estate industry. No matter how heavy is your bank account, sometimes, you are caught into a situation when you want to go for the next deal, but you are short on funds, and not only that, you have also such a short time that you cannot obtain a loan even if you have a great credit. What will you do? You will certainly search for the other options. Let me explain what they are.

Real Estate Investment: Investing the Funds of IRA
Do you remember that you have cash in an IRA? Do you know that you can invest this fund and receive your interest tax-free? Most of the investors do not really know this. They think that they cannot access the money in their IRA until retirement. This is not the complete truth. It is true that when you personally withdraw the money, you need to suffer penalties, but very few people know that if they rollover into a self-directing IRA, they can invest this fund without any penalty. Moreover, if it is a ROTH IRA, you can also receive your interest tax-free. Hence, when it comes to funding your real estate investment and all other doors are closed to you, you can find an IRA owner to use his IRA funds to make a real estate investment in your property. Very few people know that this can also be a possibility, but it certainly can. 

What is a self-directed IRA?
A self directed IRA gives the IRA owner the opportunity to make decisions whether he/she wants to invest the funds available in the IRA. There is always a third-party institution to administer your self-directed IRA. 

How Important Can Be an IRA to fund your Real Estate Investment?
Most people do not really see this as a possibility. However, now that you know you can find an IRA owner to use his funds in your real estate investment, just think how much money is currently sitting in traditional IRA’s that you could tap into. The answer will certainly surprise you, as you will find that there are much more money than you need. IRA is, no doubt, a great alternative source to fund your real estate investment. Moreover, the process of taking loan is so simple, and the interest rate is so nominal that the investors are always ready to reinvest. This is what makes IRA a bottomless pool of funds for your real estate investment.

Making a Loan through a Third-Party Institution That Administers Self-Directed IRA
It is very simple. All the forms are available on their website. They prepare all the required documents. The private lender has just to sign and fax the documents back to the website contact address. Later, when the loan is re-paid, they just need to approve the payoff. That is all it takes to make a loan through self directed IRA. 

Real Estate Investment: Other Private Lending
When all doors are closed, and you need money to fund your real estate investment, ‘private lending?comes up as a great alternative source. The great thing about private lending is the speed and the ease of funding a deal. However, the bad part is that they charge higher interest rates than they can normally achieve in the market place. 

Advantages of Private Lending

• There is a minimal approval process
• Availability of funds is quick
• Arbitrary rules does not limit you for how many mortgages you can have in your name
• No mortgages ever show up on your credit report.
• Instead of also incurring a loan origination fee commonly known as “points? you just need to pay interest only
• And, of course, the advantage for the lenders is that they receive a higher interest rate with a very secure investment.

How can you find a Private Lender?
You can do your marketing, or whatever you feel you can do, to find and attract individuals who are interested in earning a greater interest on investments secured with real estate. Let everyone know that you pay high interest for their loans on your real estate projects. Believe me, it is very easy to find such a prospect, and it takes no time. You can find one at your local investors association. You can find one at the church. You can find one at your civic club. You can find it among your friends and family or even your neighbor next door. 

The Process of Private Lending
Once you find such a prospect, convince them that how secure is their investment by real estate. Make sure not to exceed three-fourth of the loan-to-value of the after repaired value of the home. Let them decline any property with which they are not comfortable. The only condition for them must be to approve within one or two days and to fund within a week or less. After they have approved the investment, the fund goes to the closing attorney to be held in escrow. After the closing, you need to provide certain documents to the lender, including a promissory note, a Deed to secure debt on the property, lender’s title insurance, etc. 

What If you could not find a Single Investor to Fund the Entire Investment?
A lender might decline a property with which he/she is not comfortable. In that case, you can accumulate several loans together. However, make sure to provide the largest investor with a first position mortgage and to provide progressive subordinate mortgage to each smaller investor. Normally, you need to pay a higher interest rate to entice investors to accept subordinate positions. 

Hence, here you see that even when you are short of funds, you have various alternative ways to fund your real estate deal.

 

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