3 Reasons Why Investors Get 100 Investment Property Financing

Posted on: May 29, 2012

Categories: Buy

Author: Buy Fix and Profit (Guest)

If you have just thought of investing in real estate, chances are you do not have enough money to pay for a down payment. You’re lucky if you do because down payments can dramatically cut interest rates. Some intrepid real estate investors, however, do away with the down payment and put up with the high interest rates of 100 investment property financing. They do this when they are very positive that the property can rake in profits for them.

100 investment property financing 3 Reasons Why Investors Get 100 Investment Property Financing

Photo Courtesy of y Ryan Christopher VanWilliams of www.RCVWphoto.com and www.RCVW.tumblr.com via Flickr

As the name implies, 100 investment property financing simply means that you are buying an investment property with a loan that does not require a down payment, which makes it a great deal, however, this kind of financing would usually ask for a higher interest rate because there is little or no security, except for the property you are buying. Aside from that, there is something you should know – 100 financing nowadays is not 100% anymore, as you will have to shoulder costs such as mortgage insurance, building and pest inspection fees, conveyance fees and stamp duty fees.

Benefits of 100 Investment Property Financing

Should you save for down payment or should you get 100 percent financing? This is a question many investors ask because although no down payment is required, the full financing translates to exorbitant rates. While the loan rates in a 100 percent financing is indeed higher, it is not that expensive enough to scare you away. To give you an idea, here are some reasons why seasoned investors choose this financing option.

1. Use cash for other purpose.

By borrowing 100 percent, you can choose to spend your cash in other things like renovation. Aside from that, they know that using personal cash or savings to buy investment properties is not something that investors normally do.

2. Buy more properties.

Without the need to raise funds for down payments, investors can opt to buy other properties, which can make them more successful in investing as they can spread the risk.

3. Not using equity.

Seasoned investors who own a number of properties can simplify their investments because they do not need to use their other properties as collateral to borrow for down payment of their new acquisition.

For investors using 100 investment property financing, it’s all about using other people’s money to make money. As long as they are sure of a property’s profitability, a higher interest rate is something that they can tolerate.

pixel 3 Reasons Why Investors Get 100 Investment Property Financing

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