Investment Property

What are Investment Property Loans?

The great availability of investment property is the positive aspect to a difficult housing market. With large numbers of foreclosed properties, lower home prices, and excellent interest rates, investors have a real advantage. However just like any great deal, the best property deals go quickly. It’s important for investors to be pre-approved so that when those deals appear, they are poised to jump on them. Foreclosures and short-sales are highly desired by investors to enjoy many financial and personal benefits, and pre-approval is the best way to leverage your bargaining power and give you an edge in the competitive investment environment.

*The following is only general information and will not apply to every person’s situation. To learn how a Investment Property Loan could work specifically for you, call Equity Source Mortgage at 763-657-2000.

Benefits of Investment PropertiesLoan

There are many reasons why purchasing a property as an investment can benefit the buyer. One of the largest benefits is the opportunity to create ongoing cash flow. Choosing the right investment property that is in good condition and close to businesses, major roadways, or vacation spots can entice tenants to rent from you. The rent your tenants pay can be a prime source of income that will offset your investment loan payment and have an additional revenue stream for your other personal expenses. Another benefit to investing in a home are the possible tax benefits. Property taxes and home equity interest paid can reduce your return or even result in a refund. Investment properties are also a great way to diversify your portfolio to reduce overall risk and maximize returns. Furthermore, there is security in knowing that your investment is in a physical asset.

Another benefit is that you will have the ability to control most aspects of your investment. You have the power to decide if the purchase price and capital growth potential are favorable. You have the increased ability to decide how your loan will be structured. It is also your decision to manage the property yourself or hire a property manager. Finally, it is your choice on how much money you will spend on any upgrades or repairs. Understanding that you are in charge does come with responsibility as well. Because investing in property is not a passive endeavor, you have the power to choose if it is the right type of investment for your unique situation.

What to Consider?

Because investing in a property is very different from a typical home purchase, it is critical that you partner with a mortgage company that is experienced in investment lending and understands the details to ensure your needs are met. A quality mortgage company can walk you through the unique requirements involved in investment lending and help you secure the right investment property loan.

Investment property loans have different requirements for approval, so it is important that you ensure you qualify before seeking out properties to purchase. Even after approval, there may be additional expenses that should be considered including association fees, insurance, and maintenance. Also, you should examine your cash flow and account for closing costs and these other ongoing expenses to ensure that the property you select is a wise choice.

The equity in your current home may play a role in the availability of an investment loan, however there is risk involved so putting your own home up for collateral should be carefully considered. Whether the property is residential or commercial, your experience as a landlord can also factor in.

The Investment Loan Process

The most important thing to do when considering an investment property, is to have an understanding of the process and an awareness of the advantages and disadvantages involved. Becoming pre-approved for an investment property, purchasing a property, and renting or maintaining it is a process. Knowing what to expect can relieve a lot of headaches and heartaches, and ensure that you reap the full benefits of any investment decision.

The first step is to find an experienced investment property lender and become pre-approved. Once you are pre-approved, you watch the market or work with a realtor to find properties that are potential investment candidates. Then, do your homework on the property, the area, the possible expenses, and the expected rent payment to calculate your return. Once you find the right property, make your offer and negotiate the purchase price. From there, the process will continue like it would if it were a traditional home mortgage.

Equity Source Mortgage

Navigating mortgage and loan rates is complicated! Why not let our team do the hard work for you? Equity Source Mortgage is a trusted mortgage broker in Minnesota. We believe that people deserve a home to call their own. At Equity Source Mortgage, our number one goal is to match you with the best loan for you. Contact us or call us at 763-657-2000 to begin exploring your home ownership journey – YOUR Dream Is Calling!