Qualified Home Loans

Investment Property: 4 Ways to Buy

Some benefits of investing in real estate include passive income, equity, monthly rents, and tax breaks. If you’re thinking about purchasing an investment property, here are 4 different ways you can do this:

Traditional investment purchase 

A traditional investment property is simply an additional property with the sole purpose of renting or earning income. These types of properties can be purchased keeping the following in mind:

  • Down payments as low as 15%, but 25% is recommended
  • You can qualify with rents from the new property
  • Down payment funds can even come from the cash-out proceeds of another property

Buy a new primary home and rent the current one

When it comes to wealth building, it’s hard to beat owning real estate. And, of course, you have to start somewhere. That’s why one strategy to build your real estate portfolio is to hold onto your first “starter” home after you buy a new home for your family. You will likely build equity year-over-year in a healthy market while having your mortgage covered by a renter. Here are some program parameters:

  • Very low rates since it is owner occupied
  • As low as 5.0% down payment
  • You can use rent from your departing home to offset expenses and help qualify
  • Occupancy must make sense. For example, you likely won’t be buying a smaller, less valuable home to move into. Nor would you likely move from a single-family home into a 4 plex.

Buy a vacation rental 

Vacation rentals are a unique opportunity. Some municipalities allow for short-term rentals. This enables you to use the home and rent it when you are not using it. Purchasing a house like this gives you access to some unique benefits of a “second home” loan. Here are some program parameters for purchasing a vacation home:

  • Able to use a second home loan with lower rates and costs
  • You are allowed to OK short-term rent and also use it as an owner
  • As low as 10% down payment 
  • Cannot use the rent to qualify. You must qualify for both houses without rent

Get a partner who will live there 

Becoming the guarantor for someone who will occupy the property you plan on purchasing (most likely family) is prevalent. This is a unique investment property because the loan would be owner-occupied and have cheaper terms and lower down payment. Some examples include purchasing a home for a child going to college or elderly parents who cannot qualify. Here are some program highlights for purchasing a home as a guarantor:

  • Allows for as low as 3.5% – 5.0% down payment
  • Owner occupied rates
  • You’ll need enough income to support both houses

Get On The Path To Owning An Investment Property

Are you ready to take advantage of the benefits of real estate investing? If so, contact us so we can discuss your options.