PRICES may be rather attractive at the moment, but the days of quick-and-easy financing are over.
Furthermore, the tight credit market is making it tough for some investors to secure loans.
Nonetheless, with a little creativity and preparation, you can often bring otherwise-doubtful funding options within your reach.
And if you want to take advantage of some great opportunities at the moment, here are a few tips to improve your chances of success.
Increase your Initial Equity
Let’s start with something simple. By contributing 30% to 35% upfront for your new purchase, you will secure your loan and probably obtain a better deal on your interest rate.
But if you don’t have the immediate cash to do that, you consider a line of credit on your home or no investment property to bridge the gap.
Steer clear of the Big 4 Banks
If your initial equity isn’t quite as big as it should be … you might consider a neighborhood bank for financing rather than one of the big banks.
You’ll find them to be a little more flexible; plus, they may also know your local market better, and prefer investing locally.
Engaging a good mortgage broker is another good option — because they have access to a wide range of loan products. But make sure you deal with someone who knows how to find investor money.
Seek help from the Vendor with Financing
Right now, some vendors may be prepared to leave some money in the deal for a few years.
But you need a game plan — to “sell” the vendors on financing,
AND on you as well.
You need to paint a confident picture, so they don’t fill in the blanks with their worst fears.
Think Outside the Box
You may be looking to buy a vacant property, where you know a tenant can be easily found. But it needs a few things done to it first.
Most investors would seek to “screw the best price” out of the vendors, to help offset some of the upgrade costs involved.
Your 1st big mistake!
The better outcome would be to have the vendors agree to a 6-month settlement … but grant you access to renovate, after 30 days.
That way, you can complete the upgrade work, AND have the property fully let, before settlement.
But more importantly, you will be borrowing on a higher-valued property — which should cover your upgrade costs. Instead of settling early, and have those costs coming out of your own pocket.
Bottom Line: In the current market Creativity rules.
Never go into a negotiation fixated on price. With just one item to resolve, there is always a winner and a loser.
Instead, it’s often far more productive to let the vendors name the price … but you name the terms.