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Financing Investment Property Correctly Can Double Your ROI Before You Buy Anything!

Financing investment property correctly is one of the most important steps to making money on your real estate property investment deals. 

You need to make money when buying investments every time you buy or you will find yourself in very deep trouble. Buying well is the most crucial step in buying property and if you can get it for next to nothing even better. If the current owner is asking for a low offer find out why and make a reasonably lower offer. 

Do this without insulting the current owner and the real estate broker or you will lose their trust in your ability to afford the deal. When you have negotiated the purchase price to a great price and are ready to get financing you must go to a financing broker with a great fico score and demand they find you a deal which will allow you to make money from renting it out each month while being able to afford property rates, taxes, water, electricity and renovations. 

The property financing company can approach all the banks and the major lending houses on your behalf to negotiate the most optimal deal for you with the least installment which you can get on your current fico score. 

Your mortgage lending rates will vary and you can go to most of the bank’s mortgage calculators to estimate how much installment you will realistically expect to pay. Most mortgage brokers will immediately tell you if you are being too ambitious in what you are asking them to perform when they have assessed your credit line and fico score. 

You need to listen to them but do not be intimidated to negotiate with them closer to your terms as they may not have the full picture of what you intend to do.

Now read this part carefully:

I want you to invest well and make money, not lose money, but investing in property can cause large amounts of money to be lost if you are lazy and take short-cuts.

Do not forget that credit and investment property financing is a double edged sword and you need to know what you are doing to avoid serious losses. 

Are 100% loans still worth pursuing? If you can get a 100% loan and still make money you should go for it, but you will find that financing might only be through the bank you bank with rather than many creditors lining up to give you money for your newest property deal. 

People ask me if financing term should be short (5 years), medium (20 years) or long term (30 years). My answer is purely tax related and capital gains related. When I have property I would like to flip in a short space of time then the short to medium term makes sense because your monthly contributions continue to reduce your mortgage faster than if you were medium term. 

The other reasoning could be if I am over cautiously extending my credit to close a deal then every cent saved per month counts and I would lean towards a much longer term. 

My point is: It’s your investment and you can decide what to do with it. You can botch it up or make it a tepid success or a great success. It’s up to you unlike mutual funds where you have absolutely no control.