Investing in property is an effective way to build your family’s wealth. One of the most common ways to benefit from a property investment is to buy a house that needs some repairs and flip it after you fix it up. Your family might also be interested in purchasing a home that you can rent out to other families in your community. No matter which direction you go, one of the first things you’ll need to do is secure a loan. And interestingly this is the only type of debt recommended by top advisors like Dave Ramsey and “Rich Dad“ author Robert T. Kiyosaki. They refer to it as “good debt” i.e. debt that puts money into your pocket.
These four tips will help you make the most of your loan so that you can benefit financially from your decision as soon as possible.
Choose Loans with the Option of Short-Term Financing
With property investments, you want to know that you can pay off your loan quickly once the building begins to generate income. For instance, purchasing a fix-and-flip property means that you’ll be able to sell it and repay your loan within a shorter period of time compared to a rental. If you prefer to go this route, then having a short-term loan means that you can pay it off and get a new one for the next property that you invest in. Often you can get an interest-only loan to keep your “carrying costs” low until the completion of your reno project.
Find a Loan that Allows You to Jump on a Hot Property
Getting into the property flipping or renting business means that you need to always be on the lookout for great deals. When a house hits the market, the last thing you need to be doing is waiting on loan approval. Find a company that offers approvals on investment property loans in less than a couple of weeks. This allows you to be in the right position to make a bid on a property before other investors scoop it up.
Explore Multi-Residential Property Loans
At first, you might want to stick with a single-family property. However, there is more money to be made in multi-residential properties such as townhomes and condos. Once you’ve honed your skills with a safe property, try moving on to bigger and more lucrative options. Securing a loan for a small multi-residential property allows you to build your rental income.
Get the Best Possible Rates
As an investor, you already know that you’ll be paying interest on your loan. However, you do have some control over how much interest you need to shell out. Work with a lender that offers several options for interest rates. Figuring out whether or not you prefer a fixed or adjustable rate can make a difference in how much you pay for your loan until it is paid off.
Once you get started, you’ll find that investment properties can begin to pay off fast. You’ll also find that adding more property to your portfolio just makes your profits even more noticeable. Finding a lender that can guide you through each step of obtaining the right loan for your situation helps you achieve your goal of being a successful property investor.
You might also like:
- Getting Out Of The Debt Trap
- Debt and Inflationary Pressures: A Lesson in Economic Interactivity
- 5 Ways to Take Real Estate Investment to the Next Level
About the Author:
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan