Many folks find that without some help, taking step one towards long term economic security can be difficult. Housing finance simply means finding banks, companies or individuals who are able to provide personal funding for an investment housing project. This for many is the make or break in achieving your investment goals. This can be a complex process and conventional banks may back away from people who’ve got a poor or small credit rating. Many people find that securing the essential funds to make a solid start to building can made less complicated when they approach it from a standpoint of being prepared. Securing funds for housing finance can be worth the effort.
When you begin looking at investment property you should be aware that the first deal will be the hardest. You are going to have to prove to a lender that you are capable understanding the process and utlimately of paying back the loan.
Before you get started, here are some things you need to have ready:
1. Credit report – What does your credit report look like? Are there any issues that you need to correct? Your credit does not have to be perfect to get a loan but you need to be prepared to explain any negative aspects. Don’t let something that you can correct ahead of time derail things. Getting preapproved can be helpful.
2. Have the necessary paperwork ready – You will need to have two months worth of bank statements investment account records etc. You will have to have two years of tax returns or W-2s.
3. Have a plan B- If you know that you credit is not perfect, have another plan of attack. Is there someone that you can bring in as a partner who has better credit? Can you get private investing?
4. Determine what you want to finance – Location, location, location are the three most important factors. Have some ideas of what neighborhoods and specific houses you would like to work with.
5. What are the numbers – Are you looking at a remodel or rehab property? What are the costs that are associated with the project? How much are your going to be able to sell the project for after completion? Are you planning to rent from the start or is that a backup plan if you can’t sell? Who is going to manage the property?
6. Do you have a down payment? – Are you going to put money down or you trying to get 100% financing? Are you going to use equity in another property as your down payment? These are all options.
7. Will the seller finance the property- In this economic environment; many sellers are having trouble selling their homes. This creates opportunities for creative financing. Some sellers may be willing to owner finance or stay on the note with their existing bank until the equity gets to a certain point.
8. Be willing to bring in partners for things besides money – There are advantages to having partners for skills that you may not have.