What is an investment property?

An investment property, unlike most residential properties, is a property that is not your primary residence and has been purchased with intent to generate revenue, either through the future resale of the property, rental income or both.

An investment property can be a long-term project or an intentional short-term investment such as in the event of flipping, where real estate is purchased, remodeled or renovated, and sold at a profit.

Do investment properties qualify for loans?

Yes. In comparison to homes purchased as the primary residence, taking out a loan for an investment property often comes with higher interest rates and a larger down payment. It can be difficult to receive a loan on an investment property, particularly in Southern California, so the borrower must be prepared to put down at least 20% of the home price as a down payment and be able to prove good credit scores.

Tips for investing in a property:

It is important to be patient and well-informed about the market value of the property you wish to purchase. Selecting real estate that is more likely to increase in value is the most important decision you will make, therefore, buying at the right price is crucial.

Before you purchase the home, have a professional building inspector perform an in-depth inspection of the property to find any potential problems as this may hinder your profit potential. Thereafter, it is recommended to do an in-depth inspection annually.

Investment properties usually accompany a higher interest rate. Be prepared to put down at least 20 percent of the property price as a down payment on the loan and ensure that your credit is in good standing.

Contact The Forester Team today for any interest in becoming involved with investment property or investment property loans!

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