An investment property is any property - a house, an apartment building, a piece of land - that you purchase in order to earn a return on your money. Typically investment properties are not occupied by the owner. While buying real estate has historically been a solid investment, it's not a guaranteed one.
So, when debating whether to finance your first investment property, be prudent in your decision-making. Ask yourself these questions to determine how wise an investment this may be before you apply for investment property loans.
Whether it's a home, a ranch, apartment building or commercial structure, give some serious thought to how long you're prepared to own this property. For some time, experts have generally stipulated that it takes as many as seven years before the upfront costs associated with any mortgage, including investment property loans, begin to be defrayed. That means that if you're not prepared to own the property for at least that long, you may want to think twice before making the purchase.
When considering the purchase of a second property (in addition, presumably, to your primary residence), remember that lenders will consider your overall debt-to-income ratio in judging whether you're an appropriate risk. You'll need a down payment and will generally have to be able to meet monthly payments from your stable income stream, not projected rental income that may or may not materialize. That means anyone considering financing an investment property will need either a pool of savings or a healthy, stable income stream, or both.
Before buying any property, be sure you're well aware of the many factors that influence the property's value. This can help you avoid purchasing a property that has little promise of a good return. For starters, you should find out:
There are any number of reasons why an investor might become interested in buying property in another state. It might involve a location near family, a favorite urban area, on a coast, near the mountains or other attractive physical setting. But, if you're looking into investment property finance options in another state, be sure you're aware of extra steps in the process. They may include:
Whether you're most interested in investment property finance options or other personal real estate transactions, Citizens Bank offers a variety of mortgage options that may fit your needs. Choose from competitive rates on fixed, adjustable and jumbo mortgages. To get started, contact a Citizens Bank home loan originator at 1-888-514-2300.