Obtaining an investment property is more attainable than you might think. Of course, the idea of purchasing one, especially if you already own a home, can seem overwhelming. After all, the thought of taking out another mortgage is admittedly daunting. However, for many individuals, an investment property is can have many benefits — namely, increased income. In today’s blog, Family Home Loan Texas talks about the ways you can purchase this type of property and the benefits it can provide.
Is Buying An Investment Property A Good Financial Decision?
As long as you have the means to provide a down payment and you have a business plan in mind, then you can absolutely see a good return. If you are already familiar with mortgages, then you already have a good idea of what to expect. It is important to note that the down payment amount is probably going to be higher than what you put down for your house. Typically conventional mortgages for homes are 20% — or lower if you qualified for an FHA or VA loan. With an investment property, you will likely need to provide 30%. Because you will be using this property to generate income, the amount is higher. Similarly, since the space you purchase will most likely cost more than a home, your lender will want to see a thorough picture of your finances. This includes your income, credit score, and proof of your assorted assets.
Other Ways To Pay
You can also finance your down payment by using your existing home. For example, you can get a cash-out refinance, in which you refinance your mortgage and get a loan for a larger amount. From there, you will pay off your existing mortgage and get to keep the leftover cash. This can provide a significant sum of money that you can then use for your down payment. Alternatively, you can opt for a home equity loan. With this option, you leverage the equity you’ve built up in your home and receive money from a lender.
How An Investment Property Generates Income
To put it simply, an investment property is typically commercial, residential, or mixed-use. With a residential property, you will lease out space for people to live in. You will generate money through rent paid to you. A commercial property will hold a business (or several) and you will also make money through rent. It should be noted that the maintenance cost for this type will be higher than with residential, but you will receive more money via rent. Finally, a mixed-use property combines the prior two options. Moreover, it is important to keep in mind that your property could appreciate in value, meaning that you can sell it for more than you paid, and net a significant profit.
Call Us For More Information About Investment Properties
This kind of property does require a significant down payment, but the amount it can generate for you can absolutely make it worthwhile. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about how he and his team can help you through all aspects of buying a home or investment property.