Alternatives to an Investment Property Loan
When you go to buy your next investment property, you will likely find that getting approved for an investment property loan is not as simple as it has been in the past. There are many lenders funding loans for investment properties and you can certainly get approved, but you will need to take note of the current rules of the game.
The days of no money down or low money down options are a subject of the past. You’ll be expected to put 20%-30% down and you will need to have very good credit. If your credit is decent, but not great, then expect to put even more cash down. Is it still possible to get an investment property loan without a down payment? Actually, yes, but these loans are usually obtained from a commercial lender that will accept cross collateral (a lien on an additional property that you already own) in lieu of a down payment.
Your best bet will be to seek out a mortgage broker that specializes in investment property loans in your area. They will usually know of all the lenders that offer financing choices that will fit your requirements, and will be able to assemble the best deal for your situation.
In addition to knowing the best financing options, they may also have other clients that both purchase investment property and fund private investment property loans themselves. Savvy brokers will occasionally have some private lenders at their disposal to bring in when conventional loan options are not available.
Private lenders regularly have capital on deposit in a self directed IRA account specifically for backing private notes for individual investors that cannot get a traditional investment property loan. Depending on the interest rate they want, this could be a win-win situation for everyone involved, so stay open-minded.
Be sure to ask around, search the Net, and choose the best options for you. Don’t get frustrated if you are unable to find the perfect solution right away. The best option for you could exist in one relationship that is right under your nose. Do your research, understand your boundaries, and take it at your own pace.
