True 100 Financing for Investment Property – Is it Obsolete?

Posted on: May 25, 2012

Categories: Buy, Commercial Building, Residential House

Author: Buy Fix and Profit (Guest)

Most investors who have been in the business for quite some time do not have a problem with financing. They have many other properties where they can get cash out refinancing. But for someone starting out, getting access to funds to buy a commercial property as an investment may find it really hard to. Getting help from the government when getting a residential property is easy; they can even give 100% financing. But what if you are buying it for investment? Is 100 financing investment property still an available option?

100 Financing Investment Property True 100 Financing for Investment Property – Is it Obsolete?

Photo Courtesy of Jeremy Brooks via Flickr

Truth About 100 Financing for Investment Property

Most people would know that in these days of economic crisis, getting 100% financing for investment properties is no longer possible. The days when banks and loan companies are allowing full financing is over, which means that you must have some money to put in as down payment nowadays.

Because of uncertainty and economic changes, the process of getting loans is getting more difficult. Other than that, the terms used before are different now. For example in this case, 100 financing no longer means that you won’t pay for anything. In fact, 100% financing when used today may mean an 80/20 loan or giving out 20% downpayment. It may also mean that you are going to use one of your properties as a guarantee to buy another property, which is truthfully no longer a 100% financing at all.

Other Loans as an Alternative to 100 Financing for Investment Property

Since you can no longer find a true 100 financing for investment properties, should you lose hope? No! There are other ways that you can explore in order to help you buy that commercial building or multi-family dwelling. Here are just some of them:

Use your self-directed IRA- if you’ve been making huge contributions to your 401K, then that will greatly help you. This asset of yours can be put in a custodial account so you can purchase an investment property. If your 401k does not have enough funds, then you could still take out a loan from this asset so that you have money to put as down payment when obtaining another loan to buy the investment property.

Use other assets as a guarantee- commonly called ‘asset backed lending’, you can use your bonds, stocks and other securities so you can take out a loan. You will still own these assets, of course, it’s just that you’re going to use them as collateral for your loan. Usually, loans can be up to 90% of the full amount of the securities you own.

Get help from the seller – given that the property you are buying have enough equity, you can ask the seller to help you fund the down payment. There are downpayment assistance companies that do this, and as long as you find a seller who is willing to work with you, they can help you with the down payment depending on the amount of the equity of the property. This works best when the property does not have an existing loan or debt to it. This option though is far-fetched as most sellers may find this a bit inconvenient, because they will be the ones to pay the down payment for you, technically.

Although getting 100% financing may be hard to find these days, there are a lot of methods that you can use to get money for down payment. Creativity, coupled with determination and preparation can help you get 100 financing investment property from lenders and banks.

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