If you are looking into making a name for yourself in Real Estate, investment properties are a great way to increase and diversify your wealth. In 66% of housing markets, buying is more affordable than renting which is why we are seeing an increase in vacation rentals. Now is the perfect time to start looking into investment properties. Here are a few of the options you have for funding:
Analyzing your options
The very first thing you should check is what is available to you. More often than not, a traditional mortgage will be enough to finance your property. However, investment properties aren’t covered by mortgage insurance. This could cause you to have to make a 20% down payment. You could also take out a home equity loan which would allow you to use up to 80% of your current home’s value. If neither of these options thrills you, you could also look into investment partners or find a property that is “rent to own”. This is a great option for if your credit isn’t quite up to par. Renting to own helps build your credit and save up for a down payment.
What is best for you
Now that you have an idea of your options, you will have to assess which one is the best fit for you. Each option includes different requirements, eligibility, and conditions. When looking into different lenders, make sure you are comparing the different loan types and conditions very carefully. Make a list of pros and cons. This list should include the amount, terms, interest rate, and fees and costs. Try to pay down any current debt and existing mortgages as much as you can to help aid in the process.
REIT is a Real Estate Investment Trust. These companies use investors to buy and lease Real Estate and usually pay you in quarterly dividends. Since REIT is specifically specialized in investing, they typically offer you a better return on investment. Once you start doing your research, you will find several companies making claims to help you invest. Carefully read reviews and ask around to be sure you aren’t about to get involved in a scam.
Calculate the risks
Investment properties are a great idea to gain experience for your repertoire and can substantially increase your wealth. However, this can only be managed if you carefully research your possibilities and manage your financing. Never make a commitment that you can not back up with the accompanying knowledge. Before you know it, you will be a pro and may even find yourself with several rental properties under your belt. In that instance, look into a great Property Management company to help you tend to your precious investments.