Whether you are a veteran real estate investor or a beginner it would be advantageous if you could remember these financial tips because they can definitely help you with your investment. The focus should be on getting best mortgage rates, and minimal costs. Staying focused and organized will help you with that.
1. Your paperwork
Getting your paperwork ready is one of the most important steps in buying an investment property. It must have your bank statements (preferably, 2-6 months), details of your investment account and retirement account. In case, you are self-employed, you will have to show your business or occupational license, and transactions showing business bank statement. A letter from the chartered account would be sufficient proof of your employment. Of course, ensure that your social security card and your driver’s license are in good order.
2. Your Credit Score
If you are applying for mortgage to buy the investment property, a good credit score would help you secure one. Review your credit score and if you find it erratic then wait till you regularize it a bit. If you are in a hurry and is not proud of your credit score, then visiting a smaller bank may help because they are eager to get business. Going for the neighborhood bank would be ideal because they will have more flexibility, and would understand the local market better.
3. Pre-approval for loan
Hunting for property should be done after you get pre-approval for loan. This is usually done through a lender or a mortgage broker. Get the pre-approval in writing because that would be more convenient during the negotiations and the seller would be convinced that you are indeed serious about buying.
4. Scrutinize the market and dynamics
You must have heard about the importance of location scouting before buying a property. Just as that is important, it is equally important that you visit the desired location and have a talk with the local realtors to get the inside news on the market values. The internet would be a good source for this, but doing the legwork would definitely reap more results because you will be doing it personally. Alternatively, you can access sources that will give you an idea on the average rent paid in the area, property values and demographics.
5. Hiring property manager
Hiring a property manager would help investors secure a good property and manage it properly too. If there are tenants, it would be helpful because the manager can handle their needs even if you are not in town. The property manager would be knowledgeable about the laws, rights and responsibilities tied to a property and can thus advice you. It also falls within the realm of the property manager's duty to interview the tenants, perform background checks to confirm their identity and ensure they pay their rents on time. The manager would of course, be entitled to a percentage of the rent paid to you.
Choosing the right mortgage
It is imperative that you choose the right type of mortgage. Haggling with the lenders to save a few dollars a month is not good. Rather than that, you can spend the time researching on the real estate market and find out whether you can have bigger gains elsewhere. The interest on the loan is also tax deductible. However, you have to find out whether the borrowing costs are immediately tax deductible. Going for an investment loan that will let you pay the interest in advance would be beneficial.
An investment property should be all about securing your future and increasing your wealth. Hence, making wise decisions matters. You can get in touch with experienced realtor to know how to secure such an investment, manage it and gauge an understanding about the income and tax deductions you would be entitled to.