2. Definition
♦ Real estate finance is traditionally the process of
borrowing or lending, most often involving a third
party that is neither the buyer nor seller of the
property in question
♦ From the borrower’s point of view a loan is a debt
and liability, while from the lender’s point of view a
loan is an investment and an asset with the
property serving as collateral for the loan
♦ Financing a real estate transaction involves
significant risk to both the owner of the real estate
(the borrower) and to the lender
3. Real Estate Financing
• There are different ways of real estate
financing:
Commercial Sources
Hard money
Private money
Home Equity Loans and Lines of Credit
Conventional mortgages
4. Types
• Commercial real estate (CRE) refers to any
income-producing real estate that is used solely for
business purposes, such as retail centres, office
complexes, hotels and apartments.
• “Hard money” is financing that is obtained from
private business or individual for the purpose of
investing in real estate.
• Private money is similar to hard money in many
respects, but is usually distinguishable due to the
relationship between the lender and the borrower.
Typically, with "private money," the lender is not a
professional lender like a hard money lender, but
rather an individual looking to achieve higher
returns on their cash.
5. Types
• Many investors choose to tap into the equity in
their own primary home to help finance the
purchase of their investment properties. Banks
and other lending institutions have many
different products, such as a Home Equity
Instalment Loan (HEIL) or a Home Equity Line of
Credit (HELOC) that allow you to tap into the
equity you've already got
• Conventional mortgages are the most common
type of mortgage used by home buyers and
generally provide the lowest interest rates.
6. Real Estate Financing
• A homebuyer or builder can obtain financial
aid from:
Savings and loan associations
Commercial banks
Savings banks
Mortgage bankers and brokers
Life insurance companies
Credit unions
Federally supported agencies, etc.
7. Real Estate Financing
• A homebuyer or builder can obtain financial
aid from:
Savings and loan associations
Commercial banks
Savings banks
Mortgage bankers and brokers
Life insurance companies
Credit unions
Federally supported agencies, etc.