When it comes to making investments here in Illinois, how you pay for them often depends on your financial situation. Of course, it would be nice to pay cash for your investments in order to save on paperwork, interest and other issues that go along with real estate financing, but that is not always possible. If you need to seek financing from other sources, you may consider the following options.
You may be able to obtain cash for your purchase from one or more private money lenders. These lenders provide you with the cash you need in exchange for a short repayment period, usually up to one year, at a fixed interest rate. This type of loan may work best in a situation where you are fairly certain that the value of the property will increase significantly and rapidly. For instance, if you intend to renovate an existing structure instead of starting from scratch with new construction, this type of loan may suit your needs.
You may also seek out financing through a traditional lender. These loans often come with a significant amount of paperwork, due diligence and negotiation. More than likely, you will also need to meet higher standards to qualify for a loan. However, the loan term may be significantly longer than one from a private money lender, which may work better for a project involving new construction.
Regardless of the type of real estate financing you seek, understanding what you are getting into and knowing your rights is essential. Even though you are the one who needs the money, that does not mean that you have to abandon your rights or make a deal that does not meet your best interests. It may also be useful to work with an Illinois attorney who can represent and advise you through the negotiations, the due diligence and the drafting and execution of documents.
Source: fortunebuilders.com, “Real Estate Financing: How To Fund Your First Deal“, Paul Esajian, Accessed on April 1, 2018