One should seek out multiple brokers and not rely on the first broker that has been spoken to. It is the same as choosing any other expert. Call around the market to make sure you get the best possible answers and solutions to your financing needs.
It is much more difficult to get traditional financing for these properties because they are looked at a little different than a primary residence.
When you use fixers you can begin by getting a hold of mortgage brokers that do traditional financing, although your best chance is probably a hard money lender or a mortgage broker that has access to hard money lenders.
You can check our local newspaper for the area, for people seeking hard money lenders or investment property financiers. You may find them by looking for classifieds under financing or mortgages or by asking their real estate agent.
Hard money lenders are willing to loan between 50 and 80% of the value of a property after repairs, whereas traditional lenders will only loan based on a property’s current value.
Because they already have local contacts it is very possible that it will be your real estate agent in that knows exactly ho to call in any investment situation.
Traditional financing is much cheaper than getting a hard money loan. Typically interest rates range from 12-16%. Please note that you may be required to pay 3 to 5 points upfront as well.
The reason people go this route is they can get money Beyond the actual purchase of the property which is generally unheard of in traditional financing. This money can then be used to make repairs to increase the value of the property.
Make sure you include them in your purchase and holding costs so that you end up with the profits you are looking for on the property after all is said and done and you simply look at the costs of hard money loans as a cost of doing business.
Getting approved for your first loan in Being an investor can be hard work until you have yourself established.
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