Getting an investment property loan is part of the process of buying an investment property. When you want to buy real estate, most of the time it requires outside capital. Most real estate transactions take money and most of the time, it is more than you have in savings. While you will have to come up with a down payment, the rest of the money can be provided by an outside lending source. When you are looking to get involved in this sort of endeavor, there are a number of options that you could entertain. Here are a few options for an investment property loan that you could look at.
1. Interest Only Loan
One type of loan that you could consider is an interest only loan. This is great for real estate investment when you know that there is large potential with the property. With an interest only loan, you only have to worry about paying the interest as part of your monthly payment. You are not required to service the principal balance until the end of the loan. At the end of the term, you will have to pay off the entire amount of the loan in one large balloon payment.
This type of loan can give you a lot of flexibility on a monthly basis. When you do not have a lot of extra money, you can simply make the minimum interest payment and move on. When you have some extra money, you can service the principal balance by paying a little extra. This can be a very beneficial type of loan for those in the right circumstances.
2. Fixed Payment Loan
Another option that you could look at is a fixed payment loan from a traditional lender. With this type of loan, you have the same exact payment every month for the life of the loan. This gives you a lot of consistency and allows you to plan for the future easier. In addition to having a fixed payment, you are also servicing the principal balance of the loan. With an interest only loan, you have to pay off the balloon payment at the end in order to be done with the loan. With this type of loan, just making your monthly payment every month will retire the debt by the end of the term. This is a good strategy if you want to pay off the loan instead of refinancing it or selling it in the near future.
3. Private Investor
Another option that you can consider is going with a private investor. There are many private investors out there that have extra money to lend. If you can find one, they may be willing to work with you on purchasing an investment property. Private investors are usually very flexible and easy to work with when compared to a bank. This makes a private loan a very enticing option to consider.