Are you planning to purchase your first-ever investment property? Have you started searching for investor friendly lenders you can work with? Are you wondering which investment property loans are right for you?

When it comes to property investment, finding investor friendly lenders that offer investment property loans for first-time investors like you is a very crucial step. This can be a long and complicated process as there are many options to choose from and several factors to consider. It can all get a bit overwhelming and stressful. So, to help you get started with your search for the right investment loan, below are a few tips:

Learn the basics.

If you are not very familiar with the real estate industry, hearing common real estate concepts like equity, depreciation, tax concessions, and negative gearing may make you nervous. So before you starting delving into property investment, you should first start educating yourself about these and more. Before applying for a loan, you should understand all the basic terms, paperwork and processes so that you can make the right decisions along the way.

Shop around.

There are many financial institutions where you can get a loan. Probably two of the most common are banks and credit unions. There are also private lenders, investment houses, and building and loan associations. In your area, you should find which lenders are available, what types of loans they offer, what their policies and procedures are, and so on. You can also ask family members and friends for referrals.

Understand investment property loans.

Real estate investment loans come in different types and sizes. Conventional mortgage loans are the most common loan that property investors get, and they are offered by banks, mortgage brokers, and other private entities. Hard money loans are offered by companies or individuals, and they can be easier to secure compared to conventional mortgage loans. There are also private money loans, which are offered by private money lenders, and fix-and-flip loans, which are short-term loans that are granted based on the potential profitability of your property.  

Examine the loan features.

Different lenders offer different loans with different features. So before committing to any of them, you should take a very close look at what they offer to find one that suits your needs. Be sure to find out what their loan terms are like. Generally, longer loan terms have higher borrowing costs, but that may be something that you are willing to deal with for a more secure cash flow. Find out what their loan size is. Ask what percentage of the investment cost they are willing to fund. Find out how flexible they are. It is not uncommon for borrowers to encounter unforeseen circumstances that can affect their ability to repay, so look for a lender that will work with you to figure out a suitable repayment plan no matter what happens down the line.

Find out the requirements.

Different lenders will require different items from you.  Be sure to find out in the beginning what those requirements are.  You don’t want to get several weeks in to the loan process only to find out the lender you’re working with is not going to work out.  Most lenders will want to see full financials from you.  This means, tax returns, W2s, bank statements, liquidity, net worth and more.

There are some investor friendly lenders however that only require financials on the investment property you are buying or refinancing and not you.  They will provide you with an investment property loan.  They will underwrite the property based on the appraised value and rents (if it’s a rental).  Often times the only requirement from you is a certain minimum credit score (600 or above).  Our network is comprised of these types of investor friendly lenders which makes financing for your investment property easy.