Investment Property Loans
When you are starting out in property investment it is sometimes difficult to get investment property loans from banks and financial institutions often charge higher rates of interest on investment property loans reducing your profit margin. As a general rule most money lenders will require anything between 10 – 30% of the purchase price as your deposit on the property, however this rule does not apply in all cases. For example if the property you are buying is a 2 – 4 unit building and you can show that you are going to live in one of the units, then it is possible to get a standard housing loan.
If the deal you are brokering shows enough projected rate of return on your investment it is possible to show lenders of investment property loans the figures for the business transaction and in cases where the property is being purchased for the less than market value and it can be shown that the property would realize a substantially higher amount of money within a relatively short period of time, then investment property loans of up to 100% are possible.
The great thing about applying for investment property loans as opposed to owner-occupier mortgages or personal loans is that there is no limit on the number of places you can own, or already own. It is also possible to get adjustable mortgage rates, in most cases income verifications are not required and low down payments options make working with an investment property lender the most sensible solution to real estate property financing over the long term. In some cases where 1031 property exchanges are completed, or the equity for one property is used as the security for the loan on another, refinancing options make better sense in the short term, especially in cases where rental revenue can be increased and existing mortgage repayment amounts decreased.
If you are new to real estate investing but you have some substantial assets in other areas such as stocks, bonds, savings or similar financial assets you can use these assets as security for a 100% property loan. Other factors that would help process the investment property loan application is proof that the property is a solid one, purchased for under market value, and that the revenue from the rental income exceeds the amount of mortgage repayments.
Like anything else to do with real estate investment make sure you do your homework before considering an investment property loan. Although the Internet is a wonderful source of information about general investment situations it is vitally important that you consult appropriate professionals in your geographical area. Speak to professionals that you know and trust, your lawyer or banker for example, who may be able to recommend a good investment property loan provider and make sure that you take all of the same precautions when buying an investment property that you would take if you were buying your own family home.