Do You Know How To Finance Investment Property? Here's How:
Posted: Friday, November 27, 2009
by Thoriso Mashego
Mashcor
When it comes to building wealth, the best and most stable option is through investment property.
An investment property is a property acquired for the express purpose of earning a return, either through rent or capital gain. Generally, the owner does not live on the property, although in many cases beginning investors might choose to live in an acquired property while completing renovations, and then sell the home for a profit.
Loans acquired through a bank offer many advantages such as competitive interest rates and low fees, although banks might not approve a high loan to value property.
What this means is that banks generally only approve 70% or so of the appraised value of the property, leaving you to come up with the rest of the money.
This may or may not be an issue for you, depending on the amount of money you have on hand to put toward the investment.Going through an accredited mortgage broker is another popular choice. Mortgage brokers are trained to know how to effectively finance investment property and have thorough experience in doing so.
Their job description is to simplify the loan process by taking your loan application to different lending institutions and locating the one with the most affordable interest rate. An advantage to this service is that rather than being denied by one bank and having to start all over again with a different one, the broker does the work of presenting your loan to different institutions until he or she finds one that will accept it.
There are options other than banks and lending institutions. You can also borrow part or all your capital from private lenders, who use their own cash capital to fund projects they like. The fees and interest rates of private lenders are usually much higher than those of banks and other lending institutions; this means that you will have to decide if the profit you stand to make from the property is worth the additional fees.You also have the option of financing an investment property with your own money.
If in fact you have the capital to do this, this is going to be the easiest and fastest financing method.
Of course by using your own financing, you aren't building your credit score by obtaining financing and then retiring the loan through repayment.
How to finance investment property is going to depend entirely on your financial situation and the goals you have for investing in real estate.
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Would you like more information on how to get 100% mortgage? Follow the link to another very informative article =>Real Estate. Dr Thoriso Mashego is a successful real estate investor/trader, an online business owner and a medical doctor with his own private practice in Cape Town South Africa.
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Top-level comments on this article: (1 total)Great information you have here. Thanks Thoriso for writing this piece. Well done. Welcome back to the Searchwarp Community. Best of luck to you. ~Nenita~My pleasure Nenita,Thank you for your kind words, I do feel welcome to SearchWarp. I will continue to do my best to contribute. As you can see, I loooove real estate.
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