Investment Property Loans

Written by Beth Hrusch
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Investment property is defined as a property not occupied by the owner, purchased to generate income through rent or capital gains. An investment in real estate has traditionally been considered a wise financial move that can garner big dividends for the buyer. This is because real estate, whether it be land or buildings, generally appreciates at a steady pace over time, and holds its value well.

Investment Loans Make it Happen

A real estate investment that will be generating rental income could be an apartment building, shopping center or even a second home. There are several ways to finance the purchase of these investment properties. If the borrower is a home owner, a second mortgage taken out on the first home can secure a loan to buy another rental home. A refinance loan is another option, wherein the mortgage is used to both buy the property and continue payments on the first home.

A commercial loan can allow the investor to borrow a certain percentage of the value of the property. Anticipated cash flow from the venture must be at an acceptable ratio to the amount loaned. In most cases, both fixed and variable rates are available, and the advantages of both can be discussed with a loan specialist. Construction/perm loans are designed for the construction of investment and commercial buildings, and can be used to both build and maintain the structure over a long term.

An investment in real estate can be a risk that pays off in profits used to pay off the purchase mortgage. Rental income helps to offset the expenses of building and running a business, plus it creates a positive cash flow situation. A wise investment can pay for itself over time, and reward the investor with a good long-term income.

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