There are different financing options for the type of business I want to open and operate, which is a real estate investment company. Structuring these financing instruments accordingly is important and relevant to the overall success of potentially income-generating real estate investments. Additionally, choosing the right financing option depends on the factors involved in each deal or transaction, such as time horizon, transaction volume, and type of property purchased. All these factors play an important role in choosing the right financial instrument. (Berges, 2004) There are three financing instruments that I could probably use depending on what I think is the right choice for the unique objectives and goals of the business. Debt, equity, and partnerships are some of the financing options available for this type of business, and each has advantages and disadvantages. Additionally, while using any type of financing options, the company must keep in mind a very important factor called leverage; high leverage can cause an investor to go bankrupt quickly. A quick example would be: If the interest rate on a loan is 5.0% and the expected return on the asset is 10%, then leverage is positive. (Berges, 2004)Debt financing occurs when a company or individual acquires a loan, using other people's money, which can be in the form of debt or equity. This type of financial option is available by obtaining a loan from a mortgage company, bank, or from family members. “Debt financing generally requires you to repay a loan under predetermined terms and conditions such as repayment term (number of years to repay the loan).” (Berges, 2004, p. 66) When you use debt to acquire a home as an investment...... middle of paper ...... properties. However, I believe that based on my research and the company's overall strategic plan, we would only consider the methods mentioned here. Additionally, financial statements are a very important part of a business. These statements facilitate the day-to-day operations of a company and are excellent tools for gaining the trust of investors as well as banks. ReferenceBerges, S. (2004). The Complete Guide to Real Estate Financing for Investment Properties: How to Analyze Any Single-Family, Multi-Family, or Commercial Property (pp. 61-79). Hoboken, NJ: John Wiley & Sons, Inc. Retrieved February 4, 2011, from NetLibrary. Kaplan, J.M. and Warren, A.C. (2010). Models of Entrepreneurship Management (Third ed.). Hoboken, NJ: John Wiley & Sons, Inc. Solomon, M.R., Poatsy, M.A., & Martin, K. (2010). Better deals. Upper Saddle River, New Jersey: Prentice Hall.