Learn more Funding Options
Here are some Lending Resources that you may contact and research their products and services.
There are three types of loans you can use for investment property are conventional bank loans, hard money loans, and home equity loans.
These providers have not been endorse by NB Elite Realty, LLC nor have been or will be compensated by any of these home service providers. Always preform your due diligence.
Option #1: Conventional Bank Loans
If you already own a home that's your primary residence, you're probably familiar with conventional financing. A conventional mortgage conforms to guidelines set by Fannie Mae or Freddie Mac, and unlike an FHA, VA, or USDA loan, it's not backed by the federal government.
With conventional financing, the typical expectation for a down payment is 20% of the home's purchase price, but with an investment property, the lender may require 30% of funds as a down payment.
With a conventional loan, your personal credit score and credit history determine your ability to get approved, and what kind of interest rate applies to the mortgage. Lenders also review borrowers' income and assets. And obviously, borrowers must be able to show that they can afford their existing mortgage and the monthly loan payments on an investment property.
Future rental income isn't factored into the debt-to-income calculations, and most lenders expect borrowers to have at least six months of cash set aside to cover both mortgage obligations.
Option #2: Fix-and-Flip Loans
While being a landlord has its perks, it also comes with certain headaches. For some investors, flipping houses is the more attractive alternative because it allows them to receive their profits in a lump sum when the house is sold rather than waiting on a rent check each month.
A fix-and-flip loan is a type of short-term loan that allows the borrower to complete renovations so the home can be put back on the market as quickly as possible. Fix-and-flip loans are essentially hard money loans, which means the loan is secured by the property itself. Hard money lenders specialize in these kinds of loans, but certain real estate crowdfunding platforms offer them as well. The upside of using a hard money loan to finance a house flip is that it may be easier to qualify compared to a conventional loan. While lenders do still consider things like credit and income, the primary focus is on the property's profitability.
The home's estimated after-repair value (ARV) is used to gauge whether you'll be able to repay the loan. It's also possible to get loan funding in a matter of days rather than waiting weeks or months for a conventional mortgage closing. The biggest drawback of using a fix-and-flip loan is that it won't come cheap. Interest rates for this kind of loan can go as high as 18%, depending on the lender, and your timeframe for paying it back may be short. It is not uncommon for hard money loans to have terms lasting less than a year.
Origination fees and closing costs may also be higher compared to conventional financing, which could chip away at returns.
Option #3: Tapping Home Equity
Drawing on your home equity, either through a home equity loan, HELOC, or cash-out refinance, is a third way to secure an investment property for a long-term rental or to finance a flip. In most cases, it's possible to borrow up to 80% of the home's equity value to use towards the purchase of a second home.
Using equity to finance a real estate investment has its pros and cons, depending on the type of loan you choose. With a HELOC, for instance, you can borrow against the equity the same as you would with a credit card, and the monthly payments are often interest-only. The rate is usually variable, however, which means it can increase if the prime rate changes.
A cash-out refinance would come with a fixed rate, but it may extend the life of your existing mortgage. A longer loan term could mean paying more in interest for the primary residence. That would have to be weighed against the anticipated returns an investment property would bring in.
CPA - Certified Public Accountants
Examine Financial Records:
CPAs analyze financial records to prepare tax returns, create budget reports, and conduct audits for their clients. These accountants ensure that financial records comply with federal, state, and local laws and regulations.
Calculate Tax Returns:
Public accountants often prepare business and individual tax returns. They compute total taxes owed, file appropriate forms to claim deductions, and ensure that clients make full, on-time payments.
Prepare Financial Documents: Accountants prepare many types of financial documents, including tax returns, budget reports, and financial statements. They also create quarterly earnings reports for businesses and accounting records to track expenses and profits. CPAs must ensure that financial documents follow reporting and procedural standards.
Conduct Forensic Examinations:
Public accountants who specialize in forensic accounting conduct audits and investigations to uncover financial crimes like fraud. These professionals analyze financial documents to uncover potentially criminal transactions, investigate contract disputes, and provide accounting expertise for law enforcement officials.
Advise Clients on Financial Decisions:
Many public accountants provide financial management advice for businesses and individuals. CPAs may analyze financial documents to make recommendations for improving operations or lowering tax liabilities.
Some public accountants help clients plan for long-term financial goals, such as retirement.
Manage Financial Information:
CPAs must effectively manage financial information for clients, including reviewing accounts to identify discrepancies. CPAs provide tax management services to corporations and individuals.
texas lawyer - real estate Attorney
While Texas is among the states that do not require you hire an attorney when selling your house, there are times where an attorney can provide significant value. For instance, when you decide to sell the house without a real estate agent or during one of the many complex situations that can arise when selling a house. Real estate agents are adept at the standard sales transactions, but they rely on form purchase agreements that may not adequately address the legal issues you face.
A typical situations that warrant hiring a real estate attorney include:
A problem develops between the buyer and seller, for instance the buyer wants to back out after making an offer.
Allocating repair costs that may arise from the buyer’s inspection of the home.
A short sale situation.
Selling a house out of a relative’s estate.
Selling a larger piece of property with part being used in agricultural.
Selling a house with a tenant under a lease.
Selling a house jointly owned with another person who is not your spouse.
Selling a house with an issue, such as major foundation problems.
A real estate attorney is not typically expensive and can provide a lot of experience and assurance with all these types of situations.
Broker & Agent(s) do not warrant or guarantee the accuracy or work performed by any or all vendor(s), contractor(s) or subcontractor(s). Always ask for other references, work credentials & performance before selecting a vendor(s), contractor(s) or subcontractor(s)