Is Your Investment Game on Point?
Real estate is one of the most solid financial investments you can make. With the right strategy, it can deliver reliable, consistent income both immediately and long term.
Whether you’re considering investing in real estate for the first time, or already happen to be a seasoned pro just looking to hone your skills, the following resources can offer some useful guidance.
Finding the Right Loan Can Make the Difference Between a Good Investment
and a Flop
As with any real estate purchase, it’s important to evaluate your overall goals for the property before choosing which loan product to use. If you are looking for lower up-front payments, adjustable rate mortgages (ARM) may be beneficial. They offer a lower monthly payment for the initial specified term. However, once your rate starts to adjust, it could mean higher monthly expenses and more interest paid over the life of your loan. If you intend your properties to be short-term investments or plan to refinance in a few years, an ARM may be the right product for your purchase.
If you intend to keep your property for a long time, perhaps as a rental, a fixed-rate mortgage may be the better choice because it offers a steady, predictable payment for the duration of your loan, and takes away the uncertainty of increased expenses associated with your mortgage.
Choosing an Investor-friendly Lender
Not all mortgage lenders have experience working with real estate investors. In fact, many actually prefer not to work with them, because investors demand higher levels of service and expertise.
For these reasons, it’s important to look for lenders who have experience in working with investors, and those known for reliable customer service. Investor-friendly lenders will be able to answer complex questions pertaining to your investment strategy and also keep you informed on the status of your loan to help ease the stresses of uncertainty.
Getting the Most Out of Your Investment
To maximize the returns from your properties it’s helpful to reevaluate your strategy on an annual basis. Consider the local market, the average rent prices, demand for rental properties, changing property tax rates and more and ask yourself the following questions:
Did the local rental market adjust, and is it time to increase your rent? You could be leaving money on the table.
Could you increase your property’s value by taking a Cash Out Loan to make improvements to your property? Assess the home’s condition to ensure it draws demand.
If you have an adjustable rate product, has the interest rate started to change? If you have a fixed-rate loan, have market rates fallen below your current rate? In either case, reevaluate your mortgage rate to see if refinancing your property may improve your ROI.