How to Fund your Real Estate purchase without Debt

By Equity Smart Realty

How to Fund your Real Estate purchase without Debt

For most people, a real estate purchase is the most important transaction of their life. Buying a home holds sentimental value; you’re able to pass on your home to your children, or you can sell it to cash in on the accrued equity. There are various ways to fund a real estate purchase. Financing your real estate purchase begins with your ability to save your income, and your ability to make smart investments. Here are some ideas to help you purchase without a stress-inducing mortgage or other debt.

  1. Purchase with a group.
    If you have limited income, you can obtain an ownership interest in real estate when you pool your money with others. Most times, the group typically forms an LLC or a corporation. Other times, a small
    group would purchase as individuals, and indicate their percentage interest on the deed. Speak to an attorney before registering your organization because the type of organization you form will determine your tax liability.
    If you are forming an organization, create rules for future procedures, or bylaws. Someone has to manage the property, and someone has to collect rent and handle other tasks. The group will need to determine how taxes and bills are to be paid by the group. Without rules, there can be a conflict which would only burden everyone involved.
  2. Downsize
    One way to purchase all cash is by downsizing. Downsizing is when you sell a more valuable property, and then, buy a less expensive, often smaller property. The profits you earn from the sale of a highly
    valuable property can be used to purchase two more modest properties or one—based on the location of your new purchases. When you make a new purchase, keep in mind its location and size, as it can determine whether you may earn rental income and increasing equity.
  3. Save, and save some more.
    For any real estate purchase, you will need funds ready for the down payment. If your income allows it, you may be able to save enough money over time to make an all-cash purchase. To do so, you need to
    live within your means. Create a budget which shows your income and expenses. If you need more room, cut off parts of your costs that you don’t necessarily need. Consider ways you can save money without sacrificing your happiness. If you do not want a mortgage on your property, you can find other ways to purchase without debt. Speak to family and friends about their interest in home ownership, and you can come together and make this investment in your futures.

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