Understanding the Options for Investment Property Financing
Over the years, one of Americans’ favorite investment options has been real estate. This can get quite expensive though and most people can’t afford to purchase properties on their own. They need some assistance with funding. Thankfully, there are several options for funding your investment property purchases, including utilizing your current assets and traditional lending.
Investment Property Explained
An investment property is a property that is purchased to be used as a source of income or to provide a return on your investment. These are typically profitable because they provide monthly cash flow. If you own an investment property that you have rented out to a tenant, they pay you to rent. Anything that is above what is required to maintain the property is your profit.
Options for Financing Your Investment Property Purchase
There are several options when it comes to investment property financing. They are as follows:
Fix & Flip Loans
Home Equity Loans
Additional Tips for Investment Property Financing
If you are interested in investment property financing, you should be aware that there are a few hurdles you’ll need to clear. However, that’s not a problem if you are prepared ahead of time.
- Plan a Large Down Payment
A conventional loan will require that you have a down payment of at least 15%, sometimes more.
- If Possible, Use Cash
While it’s true that there are plenty of options for investment property financing, it’s a good idea to use cash if you can. This will decrease your risk if you’re not able to bring in the income from renting the property that you hoped.
- Work on Your Credit Score
Your credit score is a critical factor in determining if you qualify, how much you qualify for, and your interest rate on a home loan. If it’s good, you may be able to have a smaller down payment and lower interest rate.
If you are interested in investment property financing, contact Summit Commercial Capital today to help you understand the process of getting financing for your endeavors. As you can see, there are several options available.