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 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 investor 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 & Determining How Much You Can Afford
Most Real Estate Investors 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 buy an investment property based on getting a tax deduction, and always focus on making the right investment choice.
When you've made the decision to purchase an investment property, the next step should be determining what you can afford towards your loan payments and down payments.
Step 2: Discovering Which 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 options 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 1-800-962-6613 or Applying Now!
Step 3: 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.
Step 4: Reviewing Your Investment Property Loan Application
Depending on how much time has passed since we issued your mortgage pre-approval, we may need to collect some updated information and updated documents from you. 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 the borrower.
After we have updated your file, your dedicated loan officer will go over the details of your 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 5: Investment Property Inspection & Appraisal
We recommend scheduling a property inspection with an industry professional after escrow is opened. This individual will walk you 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 7: Mortgage Approval & Closing Your Investment Property
After we have everything we need, our mortgage processor will submit your complete file to the underwriting department for approval. Once approved, we will prepare investment property loan documents for you to sign.
Once we receive the signed loan documents, we will review your loan file again to confirm we have everything we need. If your loan file looks good, your loan will fund 2 to 3 days after your sign date, and you will receive the keys to your investment property.
Why use a Direct Private Money Lender?
- Less Underwriting & Documentation
- Closes Faster (14-25 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 !