In a healthy housing market, investing in real estate can be a great decision if you’re looking to make some extra money. Not only is it a potentially lucrative source of passive income, but it also allows you to retain ownership of a property that may appreciate in the future. However, it’s wise to do your homework before investing in a property to avoid losing money. Below, we’ll cover different types of loans for financing investment properties, rental properties, and second homes so that you know what to look for in a property and a financing solution personal loan Georgia.
Perhaps the most important thing to remember is that if you’re looking for quick cash, an investment property might not be your best bet; it can take years to see a positive return on your investment. Plus, if you don’t plan on maintaining the property yourself (experts also recommend setting aside 10–15% of the tenants’ annual rent amount for upkeep), you’ll also need to consider the costs of outsourcing property management, which ranges from $80–$100 on average per month . That’s in addition to your down payment and interest, property taxes, insurance, and utilities if you’re covering them for the tenant.
For a $100,000 rental property, for example, you may need $30,000 or more just to close on the property and make necessary repairs before renting it out. A simple and common way to evaluate a potential rental property is known as the “one percent rule.” This states that if the gross monthly rent – prior to expenses – earned from the property is equivalent to at least one percent of the purchase price, it’s an opportunity worth exploring.
Fortunately, if you’re wondering how to finance get a loan for an investment property, you have options. The following are some of the best loans forptions for financing investment properties.
Conventional Bank Loans
While the specifics depend on the lender, standard loans can certainly be used as a rental property loan. Continue reading 10 Investment Property Loans and Financing Alternatives