Which is the best option for financing real estate investments today; crowdfunding or rental property loans? Or can the two better be used together for superior returns?
Crowdfunding continues to be a hot buzzing topic. The adoption of crowdfunding by major brands, and emergence of new real estate specific crowdfunding platforms, along with masses of press coverage has made this form of fundraising even more popular.
Crowdfunding can be a great way to finance all types of things from honeymoons to new business startups to acquiring portfolios of single family rental properties. It doesn’t require putting personal credit on the line, can help spread risk, and promises to be a fun adventure.
However, crowdfunding can be far more intensive and expensive than most realize. Media stories of new startups landing millions via crowdfunding make it sound like a guaranteed path to overnight success and easy money.
What the media often fails to tell is that these ‘overnight’ successes are often the result of months of planning, and the culmination of thousands of dollars in marketing and the work of international specialist teams of marketers. Even the most popular crowdfunding platforms openly admit that their success rates are barely around 50%.
Taking rental home financing instead means far better odds of success, minutes instead of months trying to raise money, and the ability to retain control versus sharing it, and taking on the responsibility to other partners and investors.
New blanket mortgage options from RentalHomeFinancing.com have transformed the financing landscape making it far more cost effective and efficient to borrow to acquire portfolios of single family homes.
However, innovative real estate investors could combine both of these leverage options together to enjoy the best of both worlds. Aggressive investment property lenders are willing to allow creative deal structuring. So for example; an investor could secure very attractive base financing at a lower LTV in a long term mortgage loan, and then compliment the project with the media buzz, risk sharing, and support real estate crowdfunding can provide, while gaining more liquidity for improvements or marketing a new development.
What are blanket mortgages? When should they be used for financing income investment properties? What features and terms should real estate investors be demanding when shopping for a blanket mortgage loan?
Blanket Mortgages 101:
Blanket mortgages may be a new concept for many residential real estate investors. However, they have been used for decades by builders and developers, and commercial property investors.
Blanket mortgages are used for funding more than one piece of property, in one loan.
Imagine if a builder or developer needed to arrange individual lot and home financing for every property in a new subdivision, or condominium building. It would be a paperwork nightmare, not to mention slow, inefficient, and extremely expensive to the point of being cost prohibitive.
Why does every Realtor need to be turning their clients onto bulk rental home financing and blanket mortgage loans?
A real estate agent’s financial connections, the ability to truly provide their clients an edge in the market, and capability to innovate and create new business is critical for surviving and thriving in the industry.
There are an estimated 2 million real estate agents in the U.S. Each and every one of them has the ability to show prospective buyers hundreds if not thousands of properties for sale. They all know how to write purchase contracts. That’s on top of all of the other sellers, investment firms, individual investors and builders marketing their wares and services.
Recent data from the National Association of Realtors (NAR) shows mortgage financing no longer the top challenge for Realtors selling more homes, but it remains up there. Our competitve rates help insure this. Cash buyers are at a record high, as percentage of U.S. real estate transactions. The amount of capital coming into to U.S. and being freed up from within it, is only likely to grow substantially over the next few years.