Availability of Capital

  As in any investment, the availability of capital (that is, money) limits the size of your investment.  The capital to purchase property traditionally comes from two sources: (1) the investor and (2) the lending market.   The first source of capital is the investor.  When property is purchased this capital is called the “down payment.”  Down payments generally range from 10% to 30%.  Therefore, the amount of money available to the investor limits the size of the property he can purchase.   The second source of capital is the lending market.  This source includes banks, credit unions, and mortgage companies.  Generally, 70% to 90% of the purchase price is financed through these sources.