Are you considering investing in real estate to rent out or use as a vacation home for other travelers? It can turn into a fruitful source of income both passively and actively. The team https://johnantle.com/ can help when buying an investment property properly.
Consider Before Buying An Investment Property
Time, down payments, and returns are just a few parts of property investment. Here are some other considerations to think about before you invest in real estate right.
- House market trends. Choose a property that rises in value over time.
- Buying with a partner. A partner might seem like a great idea, pooling money and splitting maintenance costs, but buying with a partner also splits your potential profits in half.
- Property taxes. Talk with a local real estate agent or mortgage lender to calculate how much a specific house will cost in property taxes.
- Property management. You’ll need to decide whether to handle property repairs, tenant management, and maintenance yourself or if you’ll hire a property management company.
Applying For Investment Property Loans
Mortgages and loans for investment properties work differently than personal home loans. Here is what you need to know about property loans.
Down Payments
Most mortgage lenders no longer require a 20% down payment to get a loan. However, lenders are stingier with loans for investment properties than personal homes due to the higher risks of foreclosure and default. Most fixed-rate mortgages require at least a 15% down payment with a 680 credit score for a one-unit investment property. Lenders want you to put down 25% with a 620 or higher credit score on two- to four-unit investment properties.
Preapproval Process
You should try to get preapproved for a mortgage before searching for homes, so you know how much home you can afford. While prequalification only looks at your credit and your inputted estimate for income and assets, preapproval involves a hard credit pull and proof of income and assets. It also needs financial information so that the mortgage company can provide a customized solution. Always choose a preapproval when searching for a mortgage lender.
Other Factors
When applying for a mortgage, you must also provide basic personal information. In most cases, your lender will require you to provide two years of tax returns, two years of W-2s, and two months of bank statements to prove that you have enough money to cover your monthly costs. The more money you have and the more consistency you can show with your finances, the higher chances your mortgage will be approved. Chances are also high that banks, infamous for being highly conservative, would prefer that you had a lower salary at a regular job than if you earned more money as your own boss.
Get Started Purchasing A Property
If you are ready to take advantage of the benefits of real estate investing, you should start researching properties in your area. Assess your financial situation and return on investment for a particular property. Then, decide whether you have time to manage a property. You will also need to consider the housing market, property taxes, and whether you would want to hire a property management company.
Work with a real estate agent in your area or a reliable mortgage provider to help on your journey to buy your first investment property. The team at John Antle can assist in finding the right mortgage for you, applying for it, and much more.
