| You may have decided you would like to start | | | | equity on one property to help you purchase another. |
| investing in property but you are not exactly sure | | | | For example, you purchase a property for $100,000 |
| how to go about it. One thing you should do before | | | | by making a down payment of $20,000 and |
| you begin is to research the financing options that | | | | borrowing $80,000. The properties value at the time |
| may be available to you. | | | | of the purchase is $110,000. Six months later, you |
| Most people, when they first begin their endeavor | | | | have a positive cash flow of $1,000 a month on the |
| with property investing, find that financing is their | | | | property and its value has increased by $40,000 due |
| only means of purchasing property. The following is | | | | to your renovations. You now have equity of |
| some information regarding real estate financing and | | | | approximately $70,000 or more in the property. |
| investment strategy that may be beneficial to you. | | | | You take out a home equity loan of $30,000 and this |
| When you hear the term "leverage" applied to real | | | | is used for the down payment of another |
| estate financing and investment, you will find that this | | | | investment property. This is also known as |
| term simply means to use borrowed money for | | | | pyramiding and is a real estate finance and |
| financing your property investment. Your initial | | | | investment strategy used by many. |
| investment will be the money that you use for a | | | | Pyramiding through sale is also another real estate |
| down payment. | | | | finance and investment strategy used by many, as |
| In order for this leverage to be beneficial in your real | | | | well. In this method, when your property's value has |
| estate finance and investment strategy, you will | | | | increased, you sell instead of taking out a home |
| want to secure the borrowed money at a | | | | equity loan. |
| low-interest rate and make sure the term of the loan | | | | In the example above, if the same property was |
| is over the longest period of time that is possible. | | | | sold for its value of $150,000, you would use the |
| This is to avoid yourself from being tied up in the | | | | money to pay off the initial loan of $80,000, deduct |
| property and having least money for your own or | | | | your initial investment of $20,000, what you have |
| other investment usage. | | | | paid in interest and principal, as well as the cost of |
| You do have to remember, however, that the risk | | | | renovations, to discover you've made a profit of |
| of your investment is tied in directly with leverage. If | | | | approximately $25,000 to $30,000 in a matter of a |
| you place a small down payment on the property, | | | | six-month period. This money can then be used as a |
| the leverage is high and the ratio of the amount | | | | down payment on another property. |
| owed to the value of the property is high, making | | | | Before you begin investing in property, it is crucial to |
| the property a high risk. The more money you put as | | | | understand what real estate finance and investment |
| a down payment on the property, the lower the | | | | strategy you plan to use. However, it is also |
| leverage and the lower the risk. | | | | important to understand that property investment |
| Many, in their real estate financing and investment | | | | comes with risk. Research the facts and figures |
| strategy, use pyramiding to acquire more properties. | | | | before you make any decision with your real estate |
| What this simply means is that you are using the | | | | finance and investment strategy. |