Investment Property Research

On August 2, 2010, in Investment Property, by David Monsour

  The property we are evaluating can be seen to the right ——>

Today we’ll discuss the necessary steps to getting money on YOUR terms.  If your an investor and you simply call a bank and ask what it would take to buy a property you could get a high rate and be required to put 25-30% down.  One thing that needs to be understood is that as an investor you want to work on YOUR terms not the banks terms.  It certainly helps to be a Realtor and have an understanding how things work, but if you aren’t a Realtor hire one that is able to do what I’m doing. 

So earlier today I sent an email to two different commercial lenders asking for the interest rate on a 20 year loan with a 5 year rate lock.  This means the loan is amortized over 20 years, but the rate is only locked for the first 5 years.  After that you will have to refinance or renegotiate with the bank.  Since I’m doing a five year projection on this property a 5 year rate lock is sufficient.  I also asked for 20% down instead of 25-30% down.  One objective behind investing is to use other peoples money to make money.  We want to have the least amount of cash as possible tied up in this investment. 

This includes closing costs.  We will ask the seller to pay as much as we can.  Again using other peoples money to make profit. 

I also emailed the listing to a few insurance agents to get insurance quotes for the building

At this point I’ve only heard back from one lender.  Once I have compiled the information I’ll follow up with another blog.  We will discuss our options and see if we can pin the lenders against each other in competition for our business.  It does help to have a good track record with local banking institutions because it helps when asking for favorable loans.

Research is the key to making the property work financially.  Tomorrow I’ll be calling the utility companies to verify the property bills for the past year.  This way I’m making accurate projections.

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