The average annual salary for a real estate investor in California is $77,142, with top earners making over six figures. To become a successful San Francisco, California, property owner, you need to spend money to make money.
Luckily, you don't have to pay for real estate out of pocket. There are various options when it comes to real estate financing. Keep reading to learn what is available to you.
Traditional Mortgages
Most homebuyers get a mortgage because it is the go-to real estate financing method.
If you are purchasing a rental property, you can get a mortgage to fund your investment. Approach it as you would when buying a house. Find your preferred lender and get pre-approved to determine what you can afford.
There are different types of home loans, some with restrictions on how you can use them. If you buy a home with an FHA loan, you can't rent the home out right away because you first need to satisfy residency requirements.
When you intend to purchase a rental property, it's best to stick to a conventional mortgage.
Home Equity Financing
If you currently own a home in San Francisco, California, and want to invest in real estate, your equity might be an ideal financial source.
You don't have to sell your home to gain equity. You will opt for home equity financing instead.
Lenders won't restrict how you can use your home equity loan. You can use it to acquire residential real estate or commercial real estate.
Hard Money Lenders
Hard money loans aren't ideal for many, but they can benefit a specific type of real estate investor. Hard money loans are characterized by short terms and high interest rates.
These loans are great for fix-and-flip investors. If you are in the business of purchasing properties in bad condition, fixing them, and then selling them for a profit, hard money loans can come in handy.
This isn't the only financing option for fix-and-flip investors, but it is a common one.
Real Estate Crowdfunding
If you know a bank in San Francisco, California, won't lend you the amount of money you need to invest in real estate, don't give up on your dream. Crowdfunding is a unique financing option you can utilize.
Real estate crowdfunding involves pooling funds with like-minded investors. A successful crowdfunding campaign can raise enough money to buy the property.
Investors who contribute to the pool of funds will have a stake in the business. Each investor receives their fair share of income.
Real Estate Financing: Which Option Is Right for You?
The type of real estate financing you choose dictates the type of investor you will be. If you want to become a fix and flipper, hard money loans could be right for you. If you need partners in your endeavors, consider crowdfunding.
No matter what funding option you decide on, work with our full-service rental property management company. PMI San Francisco can help you with the buying process and beyond.
With more than 20 years of experience, we know the local area and can assist with various aspects of your journey. Contact us today to learn more about our services.
