When you think of buying investment property, the first thing that comes to mind is the finances. Therefore, the only ideal option is how to save money but the pertinent question remains, how do you go about saving money in order to afford investment property? Do you cut on utilities, food and other miscellaneous spending? While this is a viable option, it may take you a long time and it might not really work in the end.
Know the fundamental expenses such as purchase total and the loan limit as well as the total cost (insurance and taxes) of the investment property that you intend to buy. Ask yourself why you want to buy the investment property.
Most people want to invest in property in order to make some steady cashflow, to be self-employed and probably have a better retirement package.
Never go to the market without conducting ample research. This will be the easiest way for you to lose your money. Real estate investments take a long time and a lot of money. It is not something that you want to rush into blindly.
Here is how to save money in order to fulfill your goal of buying investment property:
1. Rent the property
If you start out as owner-occupant of the property, you can work out a payment plan with the current property owner. You can start by making some down payment and after a year, you could move to another house and rent out that one. The only con with this kind of arrangement is that it might be inconvenient, especially if you have school-going children.
2. Try the real estate route
To get a hands-on experience in real estate investment, you could try to become a realtor. If you have been employed in that sector before, you will know what to look for. It doesn’t entail so much; it is all about showing properties, earning commissions and arranging sales. This will boost your knowledge on all matters property and make you that extra buck.
You will also be able to enjoy other benefits along the way such as having your name featured on MLS (multiple listing services) and you can take advantage of this opportunity to seek properties as well as valuable contacts of sellers and investors. As an agent, you stand a great chance to enjoy more tax deductions than when you are on the sidelines.
3. Outline your financing options
Today, many banks offer financing options for people who want to invest in multiple properties. For example, there is the 5 to 10 property financing plan which, though not largely accepted by every bank is increasingly becoming popular. If you are looking for the financing options and you can prove to the mortgage lender that you can pay back, you will get money.
It is referred to as a non-owner occupant financing and if you have credit worthiness, you will have it easy getting a mortgage for a rental property. Go online, to the mortgage lenders sites and compare their rates. Ask questions, ask about the interest rates, repayment periods and so on.
Finding financing for investment property is not too hard. However, this is a long term investment option and you will be stuck with the payments for a long time. Find the best interest rates and save money wherever you find the chance.
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