Accounting & Finance
Cash Is King In Property – But How Do You Raise It Fast?
Ask any real estate investor, and they’ll tell you that cash is king. What they mean by that isn’t that you should hold all of your assets in cash – that would be foolish – but that you should have some money on hand if and when an opportunity arises.
If you listen to Warren Buffett, he’s clear on how real estate investors should behave. Rather than buying anything and everything under the sun in search of returns, he says that people should bide their time and wait for something precious to come along.
We’re not going to discuss the intricacies of differentiating between a valuable real estate investment from one with no legs. But when the time to buy comes – which it inevitably will – you need ways of getting your hands on cash fast so that you can take advantage of the opportunity.
How do you do this?
Let’s take a look at some of the ways you could raise capital quickly for property investment.
Borrow From Your 401(k)
For most people, their 401(k) is an account into which money flows but never comes out (well, not until they’re past the age of 60). But it turns out that there are facilities which allow you to borrow against the money you’ve got stored up in your pension account. Yes, borrowing from your 401(k) will cost you money. But there are times when investing in real estate is so lucrative that it’s worth it. You’ll have to pay to borrow if you’re under the age of 59 and a half.
Sell Your Existing Assets Through An Agency
According to Seller’s Advantage, many people need to be able to sell their homes quickly to raise cash. If you see a deal on some real estate that you can’t refuse, raising money from your existing assets to pay for it is a priority.
Granted, an agency will never pay as much as a private buyer, but when speed is the aim of the game, getting as much as you can from your existing property is not a priority. Selling your home gives you a large cash lump sum. You can divide part of that sum between investing in a new real estate, and providing funds for you to rent somewhere until you move permanently.
Sell Your Excessive Purchases
Getting the money together for a deposit on a lucrative real estate investment can be a challenge. You may have spotted the perfect apartment for a young professional, but if you can’t get the money together for the deposit, you can’t take out a mortgage, and you can’t rent out the property.
Be honest with yourself: are there any excessive purchases you made recently that you could sell to finance your investment? You could deal your flashy new plasma TV or fridge-freezer with in-built ice maker and replace it with something a little more modest – temporarily, at least.
Other ideas include borrowing from friends and family, taking on an extra job, or selling on things like watches and jewellery.