{"id":7677,"date":"2020-09-30T09:47:35","date_gmt":"2020-09-30T13:47:35","guid":{"rendered":"http:\/\/www.atyourbusiness.com\/blog\/?p=7677"},"modified":"2020-09-30T09:48:00","modified_gmt":"2020-09-30T13:48:00","slug":"want-to-buy-rental-property-but-cant-afford-it-7-tips-for-financing-investment-property","status":"publish","type":"post","link":"https:\/\/www.atyourbusiness.com\/blog\/want-to-buy-rental-property-but-cant-afford-it-7-tips-for-financing-investment-property\/","title":{"rendered":"Want to Buy Rental Property But Can’t Afford It? 7 Tips for Financing Investment Property"},"content":{"rendered":"\n

In the United States, investors own about 16.7 million properties<\/a>. <\/p>\n\n\n\n

If you\u2019re thinking about joining them and owning some of these investment properties, you\u2019ll soon find that not a whole lot of them are very cheap.<\/p>\n\n\n\n

This is when financing investment property really comes in handy. But how do you do it? We\u2019ll break down some of the best tips for you.<\/p>\n\n\n\n\n\n

1. Put Down a Large Downpayment<\/h2>\n\n\n\n

In general, you should try and put at least 20% of the costs down so that you can get better rates from a lender. However, if you can put down more than that, like 25%, you\u2019ll get offered even better interest rates.<\/p>\n\n\n\n

With a larger down payment, you\u2019re also giving yourself a better chance at being able to close on the house. But at the same time, you could have more to lose if something doesn\u2019t work out.<\/p>\n\n\n\n

The banks love it though because that means they get more of their money now, and they won\u2019t lose as much if your investment doesn\u2019t pan out.<\/p>\n\n\n\n

Unless you\u2019ve saved up a lot of money, you probably don\u2019t have a large down payment to put down. If you don\u2019t, you can always try to take out a second mortgage on the property, but the chances you\u2019ll be able to do this are pretty small.<\/p>\n\n\n\n

2. Boost Your Credit Score<\/h2>\n\n\n\n

One thing that lenders definitely check is your credit score. Your credit score plays a large factor in how willing people are to lend to you and how much interest they charge you.<\/p>\n\n\n\n

A low credit score is generally below 740, and this means that your rate of interest will be a lot higher. You may even have to pay a fee just to keep the interest rates from going even higher.<\/p>\n\n\n\n

To make sure that your credit score stays high, always pay any loan payments you have on time, be aware of how much of your credit you\u2019re using, and make sure you always check your credit report and report anything suspicious.<\/p>\n\n\n\n

3. Start Saving<\/h2>\n\n\n\n

If you know that you plan to invest in a property later on, make sure that you start saving now.<\/p>\n\n\n\n

Because an investment loan is a higher risk than someone who is just trying to buy their house, you\u2019ll find that they offer you higher interest rates.<\/p>\n\n\n\n

While saving for a large down payment is a good goal, you\u2019ll also need to save for other costs, like the possibility of having a period of time where you aren\u2019t offered any rentals. You\u2019ll also have to save for maintenance costs, repairs, and any other problems that could pop up.<\/p>\n\n\n\n

Try and create a budget that allows you to set aside a certain amount of money every month to increase a lump sum that will be able to cover you if anything goes wrong.<\/p>\n\n\n\n

4. Borrow<\/h2>\n\n\n\n

If you can\u2019t seem to save enough money to put down more than 20% on a property, you will likely have to borrow some money.<\/p>\n\n\n\n

There are several factors that will go into deciding if you have to pay a more expensive bill or not, like your credit score, how much your down payment is, how much you have saved up, and how many properties you currently have.<\/p>\n\n\n\n

When applying for a loan, make sure that you shop around so that you can get the best deal possible. If you take the first loan you\u2019re offered, you\u2019ll probably end up with a higher rate than you would\u2019ve had to settle for.<\/p>\n\n\n\n

5. Pull Money Out of a Property You Already Have<\/h2>\n\n\n\n

In most cases, you should have at least one other property before you decide to start looking at purchasing an investment property.<\/p>\n\n\n\n

If you\u2019ve already paid off your primary home, you might be able to pull some cash out of that to help finance your new property.<\/p>\n\n\n\n

By doing this, you might even be able to put down a larger down payment and not have to worry about getting approved for a loan.<\/p>\n\n\n\n

However, make sure that you weigh all the pros and cons before you do this. It can be risky and cause problems, so make sure that you read the fine print in your current mortgage to make sure that you don\u2019t run into any problems.<\/p>\n\n\n\n

6. Get a Fixed-Rate Mortgage<\/h2>\n\n\n\n

When applying for a loan, you\u2019ll likely be offered two different types of mortgages.<\/p>\n\n\n\n

There are fixed-rate mortgages and then adjustable-rate mortgages.<\/p>\n\n\n\n

The fixed-rate mortgage is the best option that you should choose. When you apply for that type of mortgage, you\u2019ll ensure that you have the same rate of interest for the duration of it. Once you do select this option, make sure that you pay off your mortgage sooner<\/a> rather than later. <\/p>\n\n\n\n

However, adjustable-rate mortgages will start with a low-interest rate, but as the mortgage goes on, your interest rates will start to rise, which can really affect your investment.<\/p>\n\n\n\n

7. Ask the Owner for Financing Options<\/h2>\n\n\n\n

Lastly, make sure that you ask the owner of the home about all the financing options that are available to you.<\/p>\n\n\n\n

If you do this, make sure that you have a plan. When you say this, it shows that you\u2019re serious about buying this, and you\u2019ll have to make a real deal on the type of financing you choose.<\/p>\n\n\n\n

Learn More About Financing Investment Property<\/h2>\n\n\n\n

These are only a few tips about financing investment property, but there are many more out there!<\/p>\n\n\n\n

We know that finding and investment properties and trying to apply for loans can be difficult and stressful, but thankfully you don\u2019t have to do it on your own. We\u2019re here to help!<\/p>\n\n\n\n

If you enjoyed this article, make sure that you explore our website to find more articles just like this one!<\/p>\n","protected":false},"excerpt":{"rendered":"

In the United States, investors own about 16.7 million properties.  If you\u2019re thinking about joining them and owning some of these investment properties, you\u2019ll soon find that not a whole lot of them are very cheap. This is when financing investment property really comes in handy. But how do you do it? We\u2019ll break down […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"_links":{"self":[{"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/posts\/7677"}],"collection":[{"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/comments?post=7677"}],"version-history":[{"count":1,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/posts\/7677\/revisions"}],"predecessor-version":[{"id":7679,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/posts\/7677\/revisions\/7679"}],"wp:attachment":[{"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/media?parent=7677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/categories?post=7677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.atyourbusiness.com\/blog\/wp-json\/wp\/v2\/tags?post=7677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}