An investment property is a form of real estate purchased to generate income (i.e., Earning a return on the investment) through rental income or appreciation. They are purchased by a single investor or a group of investors together. The market is beginning to slow down after the significant increase in housing prices over the past year. But, price changes have remained positive nevertheless. The interest rates for investment property loans, New Jersey, are still low, presenting an opportunity to real estate investors who do not have a lot of cash on them. While selecting an investment property is cumbersome on its own, once the correct house or apartment has been found, what is the right way to finance it. One of the best deals is to bring a dash of creativity and preparation to the financing game so that it comes within reach of many real estate investors.
Real Estate Funding Solutions marries a comprehensive range of loan solutions with a diverse set of loan needs so that investment property loans, New Jersey, are not a problem for us in this industry in this state. We understand your needs thoroughly and only approve a project when it meets our requirements and guarantees completion and success.
If you know about our reputation, you would know that we work with the best in business and provide the best loan facilities. You do not have to look beyond what we offer because we are equipped to handle all your loan-based necessities. We also deem it necessary to listen to and understand our clients thoroughly.
When are you ready? Essential tips.
You are ready when you decide to opt for a loan. However, there are a couple of crucial fundamentals when it comes to signifying readiness for loan application. The three signs that you are ready to invest in property are:
- Financial Stability– Investment properties loans everywhere require a higher degree of financial stability. Moneylenders ascertain it in the form of the down payment, which is not required in the case of the first home loan. The home also needs to be cleared by inspectors in different states before renting out to tenants. Along with property maintenance, this charges a hefty sum on the pocket.
- The Return on Investment is Present– There is often positive cash flow for real estate investment. Still, the best in business usually calculate the estimated Return on Investment before they purchase a property. You should calculate your estimated annual income, calculate your net operating income and find the return on investment.
- You have the resources to manage it– Investment property takes a lot of time. It would help if you performed the necessary tasks associated with advertising the space, carrying out checks on tenants, negotiating terms, performing maintenance on the property. All of this has to be done while the tenant has their ‘right to privacy.’
The tips necessary to keep in mind while preparing for investment property loans, New Jersey are:
- Make a sizable down payment– To secure traditional financing from a lender, you will need to put at least 20% down since mortgage insurance won’t cover investment properties. A large down payment gives you a firm standing in the process because you have more to lose if the investment does not work out, thus proving that you are serious about the project right from the start. The bank also gains a lot of security from a down payment and is more willing to grant you a loan.
- Ask for owner financing– Owner financing has become a secure way of tightening credit and increasing standards for the owner. However, the rule of thumb in this matter is that you have to sell the seller on owner financing, that you are capable of taking on the deal based on the reasonable assumptions you have presented. It would be best if you had a game plan for owner financing.
- Tap your home equity– If your home has a large amount of equity associated with it, you can tap into that as a form of leverage to secure financing. There are several ways to do this, such as HELOC, Home equity loan, and cash-out refinance.
- Be a “strong borrower”– A strong credit score signifies a “strong borrower.” If your credit reputation supersedes you, then you have a better chance of availing of a loan. Although there are other factors like the loan to value ratio and the lender’s policies, this is one of the best ways of negotiating a lower interest rate. The alternative is going ahead with a higher interest rate. You would also be well advised to buy credit points if that is possible.
- Turn to a local bank– A neighborhood bank can often offer excellent loan repayment terms when it comes to down payments that aren’t big or when there are other extenuating circumstances. It can occur in situations when you cannot approach large national financial institutions. Mortgage brokers provide another excellent option because their repertoire of loan products is more extensive.
Coveted Standards, Sophisticated Process
We at Real Estate Funding Solutions don’t hedge on bets, and we have the best standards and processes to ensure that your loan is not rejected. If you are prepared thoroughly, we are only delighted to match up to your expectations. Please call us at 855-913-8637, and we will get in touch with you.