HOW TO BUY AN INVESTMENT PROPERTY
If you're an experienced or first-time real estate investor, the loan process for purchasing an investment property can be exciting but overwhelming if you don't know where to start. Before you start looking at your desired investment property, there are several steps and preparation to becoming a real estate investor.
Whether one loan program is better than the other is determined on the following steps.
The 5 Steps to Purchasing an Investment Property
When you're looking towards purchasing an investment property, it should be about securing your financial future by increasing your wealth through real estate. It's important to be aware how to effectively manage your investment and whether your real estate investment will help you achieve your financial goals.
Did you know that after you take your rental income and tax deductions, the cost of owning a real estate investment property can be low?
Becoming a real estate entrepreneur and purchasing an investment property is about choosing a property that is more likely to increase in value, therefore buying at the right price is absolutely critical.
Step 1: Choosing the Right Property Investment and Determining How Much You Can Afford
Most Real Estate Investors and prospective borrowers aren’t aware that lenders have insider information on different locations and property developments. This knowledge can make a huge impact on choosing the right property for your investment goals. We recommend never making a decision to purchase a property based on getting a tax deduction, and always focusing on making the right investment choice.
When you've made the decision to purchase a property as your investment, the next step should be determining what you can afford towards your mortgage loan payments and down payments.
Step 2: Discovering Which Private Money Loan Program Is Best For You
When working with a direct private money lender like Stratton Equities, there is a library of loan programs to choose from. These loan products are different from traditional loan programs as they require less underwriting and guidelines.
There are fixed loans that are available for 30 years and 15 years, as well as adjustable loans such as a 5/1 Adjustable Rate Mortgage (ARM) or 3/1 ARM. An interest-only loan may be a good option for you if you're interested in lower payments.
Check out our list of direct private money loan programs to learn more about the options we have available for real estate investors looking to purchase an investment property. If you're ready to get started, contact us today by calling our team of loan officers at 800-962-6613 or Apply Now!
Step 3: Reviewing Your Investment Property Loan Application with Your Private Lender
Depending on how much time has passed since the mortgage pre-approval was issued, the private lender may need to collect some updated information and updated documents from the borrower.
At Stratton Equities, we review our investment property checklist with all of our real estate investors to make sure we have everything we need from them as a prospective borrowers.
After we have updated your file, our dedicated loan officer will go over the details of the investment loan program, confirm the rate you qualify for, and go over your closing fees.
We pride ourselves on ensuring that our borrowers know every detail of their chosen loan program so there are no questions left unanswered.
Step 4: Investment Property Inspection & Appraisal
We recommend scheduling a property inspection with an industry professional after escrow is opened. When requested, this individual will walk the borrower through the prospective investment property to look for any warning signs such as structural damages and other items that may need to be fixed. All major issues need to be discussed before the close of the escrow date.
During the review and processing of the loan, a member of the Stratton Equities team will schedule an appraisal appointment with the property seller's agent to confirm the value of the investment property.
Step 5: Mortgage Approval & Closing On Your Investment Property
After we have everything we need, our mortgage loan processor will submit your complete file to the underwriting department for approval. Once approved, the underwriter will prepare the investment property loan documents for the borrower to sign.
When the signed loan documents are received, the loan officer will review the loan package and documents again to confirm that everything is completed.
If the loan package looks good, then the final documents are sent to the closing department (the mortgage loan closer) to get a “clear to close” (CTC).
The loan officer will relay to the borrower that they have been cleared to close and then the mortgage loan closer will schedule a closing date with the title company.
Financing of the mortgage loan will commence when the borrower finalizes with the title company on their closing date. Usually, it takes 1 to 3 days after the signing date to receive funding followed by the keys to the borrower’s investment property.
Are You Working with a Real Estate Agent?
After you've gone through the pre-approval process for a mortgage and have found the real estate investment property you'd like to purchase, you can work directly with the real estate agent to draw up an offer and complete a purchase agreement.
If the seller chooses to submit a counter offer, they might go through several rounds of counters. Once both the seller and real estate investor agree to the price and terms, escrow will be opened. Typical escrow periods can range from 30-60 days.
Why use a Direct Private Money Lender?
- Less Underwriting & Documentation
- Closes Faster (20-25 days)
- Less Guidelines
- Access to Endless Capital = Opportunity to Endless Deals
If you have an investment property and would like to speak to one of our Loan Officers, Apply Now !
Found an investment property and interested in applying for a loan?