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A look at financing options for real estate transactions

| Dec 21, 2020 | Real Estate |

When a business or individual looks to buy real estate, the purchaser has a variety of factors to consider. One of these factors involves finding the best option for financing. 

Good financial terms and rates can make a difference between a good deal and a poor one. 

Creative financing

Forbes provides a list of creative financing for real estate properties. While this list concentrates on residential properties, it could also apply to commercial transactions. One possibility involves seller or owner financing, where the seller provides a loan to the buyer. This approach eliminates the need for a lending institution. The buyer must sign a promissory note, and the documents should address issues such as default, loan rate and time period for repayment. 

The realm of foreclosure also provides opportunities for buyers. This option increases during poor economic conditions or when the real estate market is in flux. A buyer often purchases a foreclosed property through an auction. The advantages of this route include a relatively quick process and often an attractive purchase price. 

Smart timing

Property buyers should always look at the state of the market when considering a property. Kiplinger provides a glimpse into the current state of commercial real estate, suggesting that weak consumer demand and a struggling economy could indicate a good time to buy. Conversely, if the economy worsens, it could signal a bad time to buy, especially for investment properties. 

Buyers might want to look for properties nearing the end of their financing term. Also, properties or businesses under stress due to the ongoing pandemic suggest a favorable buying opportunity. Now, as in the past, buyers should look for the best terms and conditions when considering a real estate purchase. 

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