Show me the Money!

By
Property Manager with Martin Presence Group Brok.0995682636-ASA

 

show me the money

 

You have made the decision to jump into real estate investments.  You have found the perfect “starter” property.  Now you just have to figure out how to pay for it. Once upon a time, financial institutions passed out loans like calendars, but today the tightened credit market can make it tough to secure loans for investment properties.  However, with some planning, a little creativity and a bit of good luck, such loans are within your grasp.  These five tips can help ensure you obtain that all important capital.

 

You’ve Got to Have Money To Make Money

Unfortunately there is a lot of truth to that old adage.  You are going to need to put at least 20 percent down and 25 percent is even better.   A second mortgage is a remote possibility but not easily attainable, and often just isn’t financially sensible.

What’s Your Number?

Although many factors go into figuring the terms of a loan, the biggest factor is going to be your credit score. 740 seems to be the magic number.  A lower credit score can cost you when it comes to figuring interest rates and points.

Borrow Locally

If you are a little sketchy with the down payment or you have other special circumstances that might make borrowing challenging, consider going to a neighborhood bank, rather than large nationwide financial institutions.  They often can take a little more personal look at your particular situation.

Is Owner Financing an Option?

You want to buy; they want to sell.  You can’t get a bank loan; they don’t need all the money up front.  Although in the past you would have been considered too big a risk, in today’s tight credit market, many motivated sellers are willing to consider this.  It’s worth asking, but do your homework and be prepared to knowledgably negotiate down payment and terms.  It is your job to sell the property owner on owner financing, and most importantly, on you.

 

Think Outside the Box

If you're looking at a good property with a high chance of profit, consider securing investment money through home equity lines of credit, from credit cards or even from some life insurance policies.  These are very risky sources of cash, so research your investment thoroughly before considering one of these options.

Financing might also be possible through private loans.  Just be prepared for some very close scrutiny especially if you don't have a long history of successful real estate investments. When you're borrowing from a person rather than an entity, that person is generally going to be more conservative and more protective of giving their money to a stranger.

 

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Topic:
Lending / Financial
Tags:
investment property
real estate investments
owner financing
show me the money
local bank
20 percent down payment
starter property
25 percent down payment
740 credit score
neighborhood bank

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Rainmaker
501,394
Sonja Patterson
Keller Williams - BV - College Station, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

It is good to plan on having the home vacant in between tenants, too.  In my market the smaller cheaper homes are going quickly--but the larger more expensive homes take some time to fill.

Jan 28, 2017 07:14 PM #2
Rainmaker
1,734,290
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

Great post Corey Martin , very well said.

Jan 28, 2017 07:16 PM #3
Rainmaker
3,985,569
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Borrow locally is the most importnat one.

all 5 of the last buyers that used an internet company or TV, the closings were delayed!

Jan 28, 2017 07:16 PM #4
Rainer
268,012
Dinah Stallworth-Lewis
Priority Real Estate LLC - 318.332.8281 - Natchitoches, LA
NATCHITOCHES, LA HOMES FOR SALE

Great advice for buying investment property. 

 

Jan 28, 2017 07:36 PM #5
Rainer
268,012
Dinah Stallworth-Lewis
Priority Real Estate LLC - 318.332.8281 - Natchitoches, LA
NATCHITOCHES, LA HOMES FOR SALE

I agree with #4 William Feela.  The tip # 3 borrowing local is a very good option when trying to buy investment properties.  More flexibility  at these banks!

 

Jan 28, 2017 07:39 PM #6
Rainmaker
986,123
Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Speak to 318-987-8138 Corey Martin Property Manager with Martin Presence Group with service to Ruston, LA.

Jan 30, 2017 11:44 AM #7
Rainmaker
2,178,647
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Very informative post. Nice job!  Thanks for sharing.

Jan 31, 2017 11:32 AM #8
Rainmaker
2,186,850
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Very informative! I agree - shop locally! You shared excellent information.

Thanks!

Feb 01, 2017 12:43 PM #9
Rainmaker
2,051,360
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Corey, excellent advice for people who want to consider investing in Real Estate. 

Feb 01, 2017 01:34 PM #10
Rainmaker
1,341,702
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Corey, great information for a seller...local brick and mortar lenders are preferred...nice when you can go talk face to face.

Feb 01, 2017 03:31 PM #11
Ambassador
3,161,886
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Had never heard that 740 was the magic number to get the best interest rates on loans.  

Feb 02, 2017 08:49 PM #12
Rainmaker
986,123
Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Corey Martin Property Manager with Martin Presence Group dial 318-987-8138 with service to Ruston, LA.

Feb 03, 2017 09:56 AM #13
Rainmaker
3,433,576
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Corey Martin,  Great blog and so true.  More people in the rain should be reading this one and commenting.

 

Feb 03, 2017 12:10 PM #14
Rainer
2,485
Grant Clary
Keller Williams Realty - Ruston, LA
Real estate agent in Rusotn/Monroe area

Very well stated, Corey. There are a lot of good points made in this blog. Thanks for sharing.

Feb 09, 2017 10:06 AM #15
Rainer
2,581
William Clary
Martin Presence Property Management - Ruston, LA
Marketing director at Martin Presence.

Thanks for sharing, corey

 

Feb 10, 2017 12:36 PM #16
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