Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers
Before you finalize your first purchase as a property investor, you'll have to ensure that your investment property financing is set up properly. The choices you make about financing an investment property make all the difference in the world in terms of the total cost of the property, as well as to the net capital gain which you will have as a result of your property investment activities. With this in mind, you'll want to examine all of your investment property financing options and choose well from among them.
Do you intend to keep the property as a long-term investment or do you intend to improve it and sell it relatively quickly? Your purpose in purchasing the property will influence the type of financing for investment properties you choose. For example, if you intend to sell quickly, you need to establish financing which will not charge you large fees to pay out your loan early.
The regulations governing financing investment properties vary from state to state, so you'll want to look into what the obligations will be on you. A fixed rate mortgage is generally a good idea for financing investment properties, as this will ensure stability and make planning for your costs much easier.
You should always have a plan B when it comes to financing an investment property. If you find your lender backing out of the deal, you'll have an alternate source of investment property financing that will allow you to proceed with your investment. Due to the current state of things in the financial world, this is especially important.
Before you go about trying to secure financing for investment properties, you'll need to have a good credit rating. This will let you secure financing for investment properties on the best possible terms. The best way to do this is to get yourself in some debt and manage it well. For example, use your credit card rather than cash and keep your balance paid off. This can build you a good credit rating in short order.
You can request a copy of your credit history from the three big credit reporting bureaus do this right away and work to correct anything problematic on your credit history. Once you have a good credit score, you can get investment property financing at much lower interest rates.
Before finalizing any investment property financing agreement, be sure that you understand any implications, which your purchase may have, for your tax obligations. Ask an accountant how to make the best use of your property investment tax-wise. Is it best to make this a personal investment or through a company? Talk to your accountant and get his or her advice on selecting the best financing for investment properties.
The important thing when looking to get investment property financing is preparation. You'll have to build a good credit score so you can get the lowest interest rates possible. You'll also have to have plan for how you intend to deal with your property investment, including how long you plan to keep the property before reselling it. This will help you determine which investment property financing will work best in your case. Finally, talk to your accountant about how your property investment will affect your tax obligation. When you properly prepare, you can take a lot of the work out of financing property investments.
MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET
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