Real estate is a fantastic investment for many reasons, but one of the most compelling is the variety of financing available. The stock market may be more accessible, but you’ll be hard-pressed to find financing there for your Tesla investment! We’ve made a list of three different ways to finance investment properties, so keep reading.

Funds from private investors

This is the end goal for many real estate investors, but it also requires an incredible amount of trust. Don’t expect family members or friends to fund your investments if you don’t have a solid track record of success stories.

On the other hand, this is a mutually beneficial option if you have found success. If you’re planning to purchase a home and flip it for profit, you can pay back all your investors (plus interest) and keep a nice chunk of money for yourself.

Seller financing

Seller financing could be tricky to negotiate, but it’s ideal. If the name sounds too good to be true, it isn’t! The seller finances the investment property, saving you a lot of money.

Why would a seller do that, you ask? Many investors appeal to sellers who have inherited homes from deceased relatives, as vacant properties can rack up vacancy fines and tax liens. Instead of allowing those charges to accrue, the owner can allow an investor to turn the home into a rental in exchange for the monthly payments. This becomes mutually beneficial. It’s highly situational, but it’s a fantastic option.

Like-kind exchange

This isn’t technically a form of financing, but it’s an excellent way to snag a property. The like-kind exchange is exactly what it sounds like: a trade of properties between two investors. As the name suggests, these properties must be similar (although, depending on the situation, you could end up swapping a commercial building for vacant land. It’s a little strange; you should speak with a tax professional). This swap can reset your depreciation clock and can help you diversify your assets, too!

Now that you know these three different ways to finance investment properties, find a creative method to purchase your next investment!