But before you sign the papers and purchase your investment property, be sure to check this short guide from CSMC Mortgage to get started!
1. Getting a Mortgage
If you don’t plan to pay in full for your investment property, you’ll need to consider getting a mortgage. You should start the process by looking into how much you can afford to get a sense of the type of property you'll end up buying.
2. Wait Until You Get Pre Approved
No matter if you're looking to buy an investment property or a home for yourself, one of the biggest mistakes you can make is this:
Setting your sights on a specific property before you get pre-approved.
A few things could go wrong with this scenario:
Although it’s not a commitment to lend, pre-approval is like getting the green light to start looking for a home, knowing your budget and the terms of the agreement. It can also speed up the loan application process once you are ready to move forward. So, before you shop the market for investment opportunities, talk to a loan officer first to get pre-approved!
3. Understand Your Property Investment Loan
When looking for an investment property, you likely won't be able to access FHA or VA loans, unless you plan to buy multiple units and live in one of them.
But most commonly, investment properties are financed through agency loans. It comes either with a fixed rate or an adjustable rate, both of which have specific requirements for qualification:
Then, you will need to meet the other requirements of a regular mortgage, such as proving you can cover the monthly payments and providing two years of tax returns.
4. Find the Property
As stated, we recommend looking for your investment property after seeing if you can get pre-approved. You may want to look for properties that won't require extensive work in terms of repairs or adding extra amenities. It generally depends on how much you're looking to invest, but fixer-uppers can come with low upfront costs, and drain your finances later on.
5. Get Familiar with Your Obligations as a Landlord
Being a landlord isn't just an opportunity for passive income! Be sure to check local and state requirements you sign on to by becoming a landlord.
Over to You
If you’re looking to finance your first investment property, look no further than CSMC Mortgage. Reach out to us today to find out more about our financing options.
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