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Unless you have an impeccable credit score, it is difficult to purchase an investment property using financing. Getting into real estate investment for the first time can be more than challenging, it can be down right impossible.

In this article, I take a look at 5 ways to finance a real estate investment. Don't forget to click the "continue reading" button to view the final two methods to get financing in today's economy.

1. Traditional Financing

When you hear about people using traditional means to handle the financing, they mean organizations like banks, credit unions, and other financial strongholds. The subprime housing crisis has forced lenders to deny a great many applications for financing and the future of the subprime housing market still looks grim. Without a 680 credit score or higher, you can expect your application to be denied. There are also more stringent terms and conditions in place as far as documentation goes. Now you have to provide legitimate proof of income as well as any debts.

If you are fortunate enough to be approved, you can expect a 10% down payment requirement on any property you are looking to purchase. You may be able to fair even better and find a lower rate. Either way, now is a great time to purchase homes, providing you are financially stable enough.

2. Seller Carry Back Financing

Here is a method of financing that you may not have heard of before. Creative financing, or "on term" financing is one of the alternative and less well known methods of attaining investment purchase financing. In this method of action, the seller agrees to carry the note for the buyer. The seller will always have to own the property 100%, with no debt attached. The seller has no interest in the property any longer, but they would still like to pull a profit from it. The average time frame for payback to the seller, from the buyer, is around 1-5 years. The buyer will have to refinance at some point down the road, but that's a good thing. Attaining a refinancing loan is much easier than a full on purchase loan.

3. Lease Option Financing

This is a great option for people without a lot of financial backing. This is usually a last resort for people without a lot of financial resources. After a few years, usually only two or three, you are given the option to purchase the property. Every month, a portion of your payment can go towards the actual purchase of the home. You'll have to arrange this but it can be done.

>>Continue Reading the final 2 methods

Jason Hartman
www.JasonHartman.com

Yes, bad news regarding real estate is all around us. It seems everywhere I turn, radio or TV news, websites, even family gatherings are full of people complaining about the recession and how real estate has taken a HUGE hit. They are right, however it is not ALL bad news.

Now is one of the best times ever to purchase income property. Low home prices, combined with low interest rates and thousands of people looking to rent instead of own, make this a real estate investor's ultimate dream. Let's review: money is cheap to borrow, and investment properties are cheap to buy. But before you jump in to the rental property market, pay attention to these five important tips for first-time income property investors!

1. Know your property options - You might think this goes without saying, but many first-time investors don't fully appreciate all the types of investment property options out there. Are you interested in restoring a run-down property and flipping it for quick cash? Or renting out a family home to a steadily employed couple? Or perhaps you are interested in commercial properties like a small apartment building? While you explore your options, be sure to consult an expert.

2. Seek wise counsel - A funny thing about humans is how often we try to accomplish things by ourselves! So many times, we could have avoided that horrible vacation deal to Hawaii simply by visiting the travel agent down the street! Just like travel agents or tax accountants, there are plenty of qualified experts waiting to advise you while you search out a promising investment property. Instead of hunting down the nearest real estate agent, however, choose an investment company that is keenly experienced with rental property investing. Another option is collaborating with someone experienced in real estate investing - oftentimes active investors are looking for more "partners"... (but we don't recommend this, ask us why!).

3. Location, location, location - The old saying still rings true. The most important element in real estate valuation will always be location! Not only is this true in ALL real estate, but ESPECIALLY for investors looking to rent out the properties they purchase. Why? Because you need to make sure there are people in that market looking to rent! Going after high population areas with growing job markets is key - look for property in safe neighborhoods with good schools in the area, and nearby other amenities like shopping malls and public transportation. There are many other possible tricks - such as finding property nearby a large university in order to attract college students on a time crunch!

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Buying real estate investment property is one of the best ways to invest your money, period. Not only can you borrow the financing required to purchase income property (leveraging debt and inflation), but you can rent it out to tenants in order to pay for your mortgage while ultimately earning the rights to a free and clear ownership title once all is said and done. This has been proven time and again throughout American financial history and is echoed by the philosophies of investment experts such as Robert Kiyosaki, Donald Trump and Warren Buffet. Lucky for you, Jason Hartman now offers you free investment advice and affordable guidance on the real estate deal of your dreams!

1. Atlanta - the only way to describe the Atlanta real estate market is "insatiable." When it comes to American cities, Atlanta is a story for the history books. First founded as a railroad hub of the southern states, it refuses to stop growing at an exponential pace while attracting dozens of corporate headquarters. It's population continues to grow by the millions while the number of transplant professionals looking for rental homes surges by the week. Get your hands on an Atlanta income property today!

2. Dallas - not only home to all kinds of cowboys, Dallas is continuously rated as one of the best cities in America for business and real estate by Forbes and all kinds of business journals. Their market-friendly approach, favorable tax climate, proximity to freeways and high quality of life promise a bright present - and future - for real estate investors.

3. Phoenix - when it comes to return on investment, this market won't quit. Not only does Phoenix continue to attract dozens of Fortune 500 and Fortune 100 companies, but the ratio of affordability to rental income potential is one of the best in the country, and quite consistently. Did we mention it's the 5th largest metro area in the United States, and that it's sunny year-round?!

4. Indianapolis - Combine a low cost of living, a bunch of the top sports franchises, ever-increasing recommendations by Forbes magazine and increasing employer presence... this is the gold mine that is Indianapolis. When a city in the Midwest manages to lead job growth nationwide in the midst of a massive economic recession, you should take notice if you are ready to buy income properties.

5. St. Louis - Home to very proud residents that welcome a surprising amount of tourism and visitors each year, this river city keeps on impressing investors. With a ton of top American corporate headquarters and a wide variety of healthy industries from manufacturing to high-tech, this jewel of Missouri just won't quit. Check out her ambitious sister town listed below...

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One of our recommedned CPA/Lawyers will be live at 11am (PST), 2pm (EST) today to reveal some tax consequences of a short sale or foreclosure.

If you, a friend, family member, or business partner has had to settle a credit card debt, modify a loan, complete a short-sale transaction, or go through a foreclosure on a property you own, this IS A MUST LISTEN SHOW! Mark breaks down the 1099-C and HOW to get out of the Debt Forgiveness Income. You would be suprised to learn there are several ways to get out of claiming this income and it can change your entire 'plan' or perspective on the situation. You don't want to miss!

Listen Here: http://bit.ly/ncAWYK

If you want more information on me or my company which provides free advice and help for those wanting to invest in income property nationwide, please visit www.JasonHartman.com or give us a call at 714-820-4200.

Think about it... It costs more to buy a single family residential home than it does to plunk down the cash to buy a share of stock or an ounce of gold. This reality of investing leaves many beginner investors wondering whether or not they should find cash partners for real estate when they're ready to buy. After almost a quarter century in the property business, we can say the answer is an unqualified "yes." Except when it's "no." Or perhaps we should say "yes" but with a few caveats. Nobody wants to be left holding the bag when a real estate deal goes bad, so here are three mistakes to avoid.

1. House by House Only: You might think you've found the greatest partner since Batman took in circus performer turned Boy Wonder (AKA Dick Grayson) but don't, under any circumstances, add their name to your Limited Liability Company. In other words, don't make them a 50% partner in your entire business venture. Want to partner on a specific house? Fine. Do it with our blessing but keep the arrangement on a house-by-house basis only. The problem with making a cash partner an equal on your LLC is that it becomes hard to get rid of them if something goes wrong and you find out they're actually sort of slimy. Partnering on a house-by-house basis allows you to isolate and contain the financial damage generated by choosing a bad partner.

2. Get it Writing: While they didn't invent writing just so real estate investors could outline their agreements with business partners, it makes a lot of sense to take advantage of a written contract. For all practical purposes, if it's not in writing, it might as well not exist. Even though the law recognizes a handshake as a binding agreement, it can get tricky to prove in a court of law. Doesn't matter if it's your brother, mother, or dear old grandmother, write down such particulars as how the profits are to be split and who contributes what to the deal. Don't say we didn't warn you!

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