If you’ve heard a lot about real estate investing and have decided that it’s time for you to give this wealth-building strategy at try, then your next step is acquiring financing. Understanding how to finance your investment properties is going to be the key to obtaining an abundance of them. Here are some great tips for helping you to secure the financing that you’ll need.
One of the best strategies to get your first investment property is the house hacking method. This basically works by purchasing an investment property that has multiple units. In most cases, you’ll be dealing with a duplex or a triplex. You’ll live in one of the units and rent out the remaining. Your tenants will be paying you rent, which essentially works to pay the mortgage, insurance, and leaves you some passive income to spare. Because you’ll be living in the property, you can typically obtain this type of mortgage with a very minimal down payment required.
Partner With Other Investors
It’s completely possible to get an investment property without having to put any of your own money on the line. Many investors who are looking for good places to put their money will front the costs of purchasing an investment property. Your commitment to the partnership is considered sweat equity. This is doing all the research, prep work, and ongoing care for the property once it’s been purchased. Hooking up with these passive investors isn’t too difficult to do. You can find many of them at your local REI association meetings.
It can sometimes be difficult to get out of the big bank mortgage mindset. But, there are many properties out there which the current owner is more than willing to provide direct financing to a new buyer. This works with you signing a contractual agreement with the existing property owner for the purchase of the property. The existing owner typically holds a lien on the house and you pay them directly each month. The best part about owner financing is that you can set up any repayment terms that you both agree to. This could mean no payments for a year or payments every quarter instead of monthly.
As you can see, there are many ways to go about financing a new investment property. It really comes down to you have the motivation to see the purchase of the property through. Once you start thinking from the mindset that you’ll just do it, you’ll start to get more ideas from your mind on how to finance your next properties.