If you're looking to earn passive income or you want a long-term investment, buying a rental property is the answer. Rental property owners generally find tenants for their properties, and they make a certain amount of money each month. Seasoned investors may have a sizable savings account in which they can use their own funds to buy a rental property. But, if you don't have the funds, consider financing the property.
Maintain good credit. An acceptable credit history is necessary to finance any type of real estate. Pull your credit before approaching a mortgage lender. Boost your credit score by paying down debts and maintaining a good payment history.
Save money for mortgage-related fees. Buying real estate is expensive. Thus, you'll need upfront cash to complete the purchase. Cut back on extra spending and save money for a down payment, closing costs and other fees (inspection, title search and credit report fee).
Use a broker. Some mortgage lenders only offer owner-occupied home loans. To finance a rental property, you'll need to acquire a non-owner occupied or an investor loan. Contact a broker and explain your plans to purchase a rental property. They'll connect you with several suitable lenders in which you're able to compare investor loan rates and pick the best deal.
Schedule an appraisal. Once you've chosen a lender and they've approved your request for a loan, you'll need to schedule an appraisal. Appraisers determine the property's worth. This is necessary because lenders will not lend more than the property's value.
Attend your loan closing. To finalize the real estate deal, schedule your loan closing and sign the loan documents. This is where you pay your down payment and closing costs and receive the keys to your new rental property.
Mortgage brokers charge a fee for their services. Inquire about fees before using a broker.
If you can't qualify for a traditional loan, use a private real estate investor. These individuals and corporations are seasoned investors, and they finance various real estate projects.
Property inspections are optional but highly recommended.
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