A Guide To Real Estate Financing Options

By Author: Naveed Ali
Total Articles: 5
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7 Funding Options You Can Explore

Bahrain’s real estate transactions have increased by 36% in Q1 2021 reaching $600m (226 million BD), according to figures released by Bahrain’s Survey and Land Registration Board. These figures represent a boost of more than a third compared to the first quarter of last year when numbers were just over $440m (166 million BD).

This clearly indicates that the real estate market in Bahrain is booming and is likely to continue to be so.

If all this has convinced you to investing in real estate, then maybe you are looking for real estate financing options. Even though real estate is a great investment it can come with a steep price tag. Fortunately, you have several options.

Whether you want to invest in land, residential or commercial properties, many investors find that a diverse real estate finance investment portfolio can be beneficial and rely on ...
... a mix of real estate financing options to manage their investment properties.

Know All About Real Estate Financing Services

Regardless of whether you want to purchase, build, or rent, several real estate financing solutions are available to suit the needs of anyone interested in making a foray into the real estate market.

Here are some:

1. Mortgage

A conventional mortgage is a common real estate financing option for rental property investors who may own one or more residential properties. You can take a loan to buy a property and then make monthly payments until it’s paid off. Some financial institutions also offer the payment of household expenses.

2. Structured Loans

These are tailor-made financing solutions to meet complex needs or varied requirements of real estate developers that conventional financial products cannot address. With this type of financing, you can gain access to readily available funds for large projects.

3. Portfolio Loans

Conventional loans tend to have a strict underwriting process and it can be challenging for real estate investors and the self-employed to be eligible. Some banks provide portfolio loans with flexible terms and lenient qualifying standards. Besides, the combined interest rates for these types of loans can be relatively lesser than having a bunch of one-off property loans.

4. Mezzanine Loans

Bridge the gap between the senior debt financing available to fund a real estate deal and the equity the investor has available to put into the transaction. As implied by its name, mezzanine or a level above the ground floor, is right above the primary debt in a stack of investment. If you require funding over and above the amount procured from a senior lender and don’t have enough cash to close the deal, you can opt for this type of real estate financing to seal the deal, without the need to put a hefty sum upfront.

5. Loan against Property

Another common type of real estate financing, this type of loan is predominantly sought for residential properties. They provide funding to investors based on the liquidation value of the asset.

6. Pre-Let Loans

You can also take loans against rent receivables wherein you may have let-out property. This type of real estate loan enables homeowners to borrow money from financial institutions against future rental income. With this facility, homeowners can earn a line of credit.

7. Construction and Speculative Development Finance

If during the construction phase funding is required, investors can avail financing towards the developments of their properties. This may involve a higher leveraging for profit sharing wherein properties are purchased with a view to generating long-term value through active management.

Real estate is usually a long-term game regardless of how you invest in the property. When opting for real estate financing services, ensure that you can afford the payments when you take the loan and how you can reduce interest rates based on your credit history.

Ahli United Bank (AUB) is an esteemed bank in Bahrain that provides a gamut of real estate financing services on lands, villas, residential real estate and investment property. Now that the real estate landscape in Bahrain has become a lucrative market, investors can expand their portfolios by seeking real estate financing and gain easy access to funds to make valuable investments. Take the time to carefully compare your options to find the right fit for your requirements and get the best loan possible.

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