Real estate investments have been observed to require vast initial capital outlay which can be obtained from various sources. It is often difficult to finance hefty scale investments in real estate solely from personal savings. Hence the need for other sources of finance such as equity or self- financing, commercial banks, merchant banks, insurance companies, mortgage institutions among others.
More frequently, investors borrow from banks, life insurance companies, or other institutional lenders a substantial portion of the cost of real estate, and the debt will be secured by a mortgage creating a lien against the property. In some cases, the real estate may be acquired subject to existing debt, existing debt may be assumed in connection with the acquisition, or the seller may be willing to take back a lien position to secure a portion of the purchase price and perhaps repayment of existing financing.