Investment properties can be fantastic ways to grow your money, providing a steady stream of income and valuable assets that can help build wealth in the long run. However, getting financing for that rental property can be a headache—especially if you’re new to real estate investments. Understanding how the lending market works, choosing the right loan, and working with a specialist can simplify the process and dramatically improve your chances of success.

Getting a Loan for Your Rental Property

Weigh Your Options

Different lenders offer different loans, each of which has its own advantages and drawbacks. Conventional loans may be more attractive to borrowers with a good credit score and debt-to-income ratio, but the bank may want a 30% down payment on investment properties. HUD loans are backed by the federal government with looser qualification criteria, but the lender may require previous experience on your part before issuing a loan.

Know the Difference

Buying an investment property is a little different from purchasing a home. For one thing, most banks will require a higher down payment, and they like to see a six-month cash reserve. The more loans you have, the more stringent the credit requirements will be, so you might want to begin working on building your credit before getting into the real estate market.

Work With a Specialist

Many mortgage brokers specialize in helping homeowners buy houses, but don’t have much experience with investment properties. If you’re planning on getting into rentals, work with a broker who specializes in commercial properties. Not only will they help you avoid common problems that could derail your deal, but they’ll also shop around and compare rates from a variety of lenders, ensuring you get the best loan possible.

If you’re looking for an investment property anywhere in Ames, IA, Howell Investment Finance is your commercial loan broker. Whether you’re buying a single-family home or an entire apartment building, you can rely on their team to guide you through the process and ensure you get started on the right foot. Visit their website for an overview of their loan products and services, or call (515) 233-8228 to speak with a broker today.