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Buy Income Property |
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Determine Your Means
· How much can you borrow comfortably? One of the best ways to figure out how much you can borrow is to talk to a loan officer. I prefer to use a mortgage broker because they are usually more accommodating, more competitive, and have more products to offer than a bank or mortgage company. They seem to understand that if they don't find you the best loan that you can go easily go somewhere else. Also, if you know your credit is good and have an idea of what kind of property you want to buy, it is somewhat easy to estimate how much money you can borrow. [link to financing section] · How much do you want to spend? Once you determine how much you can borrow, decide how much you want to borrow. Do you want to borrow as much as you can or do you want to save some borrowing power for your next purchase? The more you borrow, the less cash flow you will make on your property each month. Also, by borrowing less, you will be able to build reserves faster and whether any economic downturns more easily. To the contrary though, the less money you put down (more you borrow), the higher your potential return (since return is calculated as gain/investment) and the less money you stand to lose if the deal goes awry. · How much do you need for a down payment? Get an estimate of how much money you want and/or need to purchase your investment property. Start saving now so that by the time you find the right property you'll have enough money to make the down payment.
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