Real estate is one of the most robust and reliable forms of investment in the world. There are several reasons for this, with the chief one being that people will always need a place to live or do business. The land is also limited, although development and redevelopment are less-so. It requires a lot of effective capital to break into the market and start acquiring investment property. Let’s see what options are available to get you on the road to starting your very own real estate portfolio.
Real Estate Renovator
You may not see yourself as a real estate “investor” so much as a renovator; in this case, then house flipping should suit you just fine. Different loans are optimized for this strategy, and the leading one is the fix-and-flip loan. You first acquire your investment property and renovate it before putting it back on the market. This is done quickly, so you will need to look for short-term loans that have higher interest rates. These loans tend to have to pay off within 12-18 months. You may not even have to pay anything towards the principal if you get an interest-only flip-and-fix loan for your investment property.
Conventional Bank Loans for the Investment Property
These aren’t all that different from traditional mortgage loans. You would see that the requirements for obtaining one follow these closely – in fact, in most cases they are identical. The one major difference is that, for the investment property, the down payment will be considerably larger. It is presumed that you intend to make it an income-producing property, after all. Let’s look at some numbers for comparison. The down payments are as follows:
• Residential property for living: 3%
• Single-unit investment property: 15%
• Multi-family investment property: as high as 30% in some cases.
For help in navigating the robust world of loans and investment vehicles, you can talk to the real estate experts at Ideal Financial Group.