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Experienced investors have unique rental property financing needs. One thing that seasoned real-estate investors look for in a financier is flexibility. Here we have some excellent tips aimed at experienced investors.
Don’t Get Prequalified, Get Preapproved
Clever and experienced investors are wise to seek out preapproval rather than mere prequalification. If you’ve been investing in rental property long enough, odds are you’ll be prequalified for all kinds of financing, but that only gets you so far as home sellers are known to ditch prequalified buyers for ones that are preapproved.
With that in mind, your focus should be on getting preapproved well-before you make an offer on the property.
Steer Clear of Financing Lines of Credit Against Your Other Properties
To the amateur investor, securing lines of credit borrowed against the value of your other properties might seem like a quick way to free up some capital. More experienced investors know that while convenient in the short-term, it’s not worth the risk.
After working so hard to acquire those other properties, there’s no sense risking it all for more credit when you have so many other options available.
Short Term Vacation Home Rental Loans – Capitalize on Niche Markets
One of the most lucrative forms of financing that experienced investors love to take advantage of are short term vacation home rental loans. These loans help investors break into a highly profitable market for vacation rentals.
Vacation rentals are a special niche of the market that savvy investors know to be one of the most lucrative. A short-term vacation loan can cover up to 75% of the purchase price, which makes it easy for you to come up with the remaining 25% to put down.
The only fee you’ll encounter is for the appraisal which goes directly to the vendor. These deals are easy to close and only take around 3 weeks on average.
Stated Income Loans – Ease of Qualification
Stated income loans feature exceptionally accommodating terms for qualification. A major advantage of stated income loans is that you don’t have to show your tax returns to qualify.
With this type of financing, you can typically qualify primarily off of your credit score. If you haven’t filed for bankruptcy within the last 2 years and have a credit score of around 650, you are a great candidate for a stated income loan.
When it comes to banks, the regulations are as tight as the purse strings which have been kept drawn shut ever since the troubles of 2008. Even if you get approved by a bank, which would frankly be rather miraculous, the terms would be unfavorable. There’s no way a bank will finance single-family homes for rent without having you sign away nearly everything you have first.
All of this is why it’s so much easier and more lucrative to work with a direct money lender that offers stated income loans. You can finance single-family or multi-family rental properties without any of the fuss.
Options of Lease-to-Own Agreements
Whether you are a seasoned investor or a beginner, there is money to be made in lease-to-own properties. There are many folks that would love to own their own home, but for one reason or another are unable to procure financing. Meet with your potential lessee and construct a reasonable lease-to-own form that is suitable for both of you. With this type of set up, you can earn more money than with the traditional rental average.
Making a Profit from Your Properties
One key is acquiring cash flow positive properties. These types of properties usually generate a gross yield of 9% or higher. You may find that your property does not generate positive cash flow in the beginning, but that is typical. It is easier to find these types of properties in regional areas. They often come with reduced entry prices and taxes. However, keep in mind the effect of fluctuation in the economy in these areas. Do your homework. Some properties may increase in value, but growth in capital may be slow.
Another key is ensuring that you procure properties that are increasing in value at a speedier rate than inflation coupled with utilizing a fixed-rate mortgage you stand to gain a nice profit.
Blanket Loans – Financing Designed for Empire Builders
When you’re building a real-estate empire you’ll need a way to finance multiple rental properties under one loan. The inconvenience of financing multiple properties separately is something that any experienced investor knows to avoid. Not only is keeping a collection of different mortgages inefficient and hard to keep track of, but it’s also considerably more expensive.
Financing ten or more rental properties under a blanket loan is the best and most efficient way to build a real-estate empire.
Raise Capital the Smart Way, with Rental Home Financing
You have the experience, work with someone who can see eye-to-eye. Rental Home Financing is the premier choice for professional income property investors. Rental property financing is an art form.
Rental Home Financing understands the needs of experienced rental property investors, call today and see what we can do for you.