Last Updated on Mar 23, 2020 by James W
There is definitely money to be made in real estate. If you’ve been interested in getting into investment property, you might be getting into a very lucrative career. However, as with any investment, knowledge and good strategic planning are necessary for success. Here is some property investment advice to help you succeed in your new venture.
Don’t expect an instant fat paycheck
Unfortunately, this type of wealth, while it can be large can also be very slow growing. It also takes money to make money in this business. You will definitely see your finances dwindle before seeing a payoff. The most important thing is to remain patient and have a plan. Know what kind of property you want and how much you can spend. Also be realistic as to what you will have to spend on your property before you can start turning a profit and if you are in any way unsure, then seek professional property investment advice from a trusted source.
Be a low risk borrower
Unless you have a hunk of cash available, this is the most important piece of property investment advice. After the market crashed, some investment property owners took a hit. However, here in the last few years as the economy is slowly improving, investors are starting to look at investment properties again.
The days of quick and easy loans are a thing of the past though. If you plan on getting a loan for your investment property, you need to be an attractive borrower, meaning you need to have a down payment and your credit needs to be in good shape.
A low credit score can mean a much higher interest rate, which cuts into your profit or it could even mean not getting the loan at all. It also helps if you have some cash in your accounts to show that you will still be able to make a mortgage payment even if your property is vacant for a little while.
Be prepared to have a down payment
No longer are banks giving huge loans on investment property and mortgage insurance won’t cover investment properties so you will need to have around twenty percent of a down payment for this type of property. The more you put down, the better your interest rate will probably be for your overall loan. Do your homework and seek out property investment advice before committing to a down payment.
Be Creative
There are alternative ways to access funds to invest in an investment property like a home equity lines of credit, private loans, or even borrowing against life insurance. However, this is obviously a lot more risky and hardly ever advised. Be sure to do your research on the property you are interested in. If it’s a highly lucrative opportunity, it might be worth looking into these less than traditional ways of obtaining the cash you need to get started.
Try your neighborhood bank or owner financing
A big bank is going to look at certain things on a piece of paper and either grant or deny the loan based on those particular things. A smaller bank is going to have a little more flexibility and will probably look at the big picture a little better. They are also a little more familiar with the local market and have a better idea as to whether your property will end up paying off in the long run.
Owner financing has gained a lot of popularity due to the bad economy. When loans were handed out hand over fist, there was no need for owner financing, but now it’s definitely worth looking into. There are a lot of motivated sellers out there, ready to shed their unwanted properties. Just make sure you and the seller are in agreement with the terms.
Investment property ownership is an exciting and profitable venture if you plan and strategize appropriately. Although risky, it can also be very rewarding.
