Investment Mortgage

The first step when looking for a way to fund your investment properties is to consider how you are going to buy, PLUS, deciding on your exit strategy.

“Do you plan to ‘fix and flip’, rent the property out, or sell the home to another investor? Small differences in your loan could cost or save you thousands, depending on which type of loan package you end up going with.

Which investment mortgage is best for you?

It all depends upon your personal financial position, how soon you plan on paying off the loan, either by refinancing, selling or cashing out, and if you have a variable rate loan, it depends upon what happens to interest rates over the period that you have your mortgage in place.

Your options for an investment mortgage will also be limited by your income, the down payment you make and your creditworthiness. If you have lost a property to foreclosure, or have less than good credit, in this market you may need to consider using creative financing rather than getting a traditional mortgage.

A good mortgage broker or lender will help you compare and contrast the various mortgage programs, and you may also want a financial or investment counselor and a tax professional to help you make the best choices.

The typical investment mortgage today won’t allow you to get into a real estate deal in a highly leveraged fashion. If you do have the money to make a large down payment then this is less risky, and with fixed rates at historic lows this can be one of the best ways to invest your extra cash in today’s market.

Creative Funding Methods for Investors Who Can’t Get an Investment Mortgage

OK, so how do you get the funding for your investment properties if you don’t have a big down payment or perfect credit? There are a number of creative methods you can use that don’t require you to get a traditional loan.

My favorites include the Sandwich Lease Option, Owner Carry Financing, and buying while leaving the Existing Financing in place. With each of these methods, you’ll need to make sure that you find a motivated seller first. Ideally this would be a home owner who is just looking to get out from under their payments. In addition, you’ll need to make sure that the property is able to generate enough in rental income to cover the existing mortgage payment and other costs of owning the property.

Whether you end up getting a conventional loan, or learn how to use creative financing so that you don’t need an investment mortgage, the most important thing is to get started now while real estate is available at bargain basement prices. Look for an investment club in your area that you can join so that you have other investors to hang around and network with. Dedicate at least 3 to 4 hours a week to focus on learning more about your market and how other investors are able to buy real estate creatively without using a traditional investment mortgage.