Refinance Investment Property

What is refinancing?

There may come a time in a homeowner’s life when he or she decides that he or she wants a new mortgage.  So, he or she runs to the bank, and the bank says, “I’ll pay off your old mortgage and give you a new one equal to the amount your house is now worth.” Many middle class and poor get themselves into trouble, because they refinance an appreciated property to get a chunk of money to pay off their bills with.  They pay off those bills, yes, but then they get right back into debt.  Unfortunately, now they owe the money on their new bills, and they still owe money on the new mortgage, as well.  They are worse off than before.  This is a very poor person’s move, no matter how big the dollar amounts.

A middle class move is to use it to acquire a lower interest rate, thereby lowering the monthly payment the homeowner has to pay.  This is good for most purposes, if used wisely.

It can be used by an investor with investment properties, as well.  When used as an investment tool, refinancing is very powerful.

When to Refinance an Investment Property

Let’s walk through a scenario when it might be a good time refinance an investment property.  Let’s say you have bought a piece of property, and you have been renting it out.  You have repaired the property investment to a like-new status, and now your previously $100,000 property is worth $120,000.

You are out and about looking for new property deals, and you find one that is just irresistible.  You could do it if you put no money down, but no lenders will approve you for no money down.  But, all is not lost.  You could refinance, and use this difference between what the home is worth now and what the old mortgage had on it as a down payment on your new property.

Refinancing is not something you should do without some research, as you can get yourself into big trouble if you do not know what you are doing.  The outcomes can be potentially disastrous, but refinancing can also be a very powerful tool to help you get much richer, much faster.  So, you can be poor, and refinance to pay off bills.  You can be middle class, and refinance to get a lower monthly payment (sometimes the rich do this on their investment properties as well).  Or, you can be rich, and refinance to get more investment money on a home you have increased your equity in.

Buying Investment Property

There are many reasons that people decide to buy investment property. They may be getting their first house, and so they decide to pay a little bit more and get a multi-family home like a duplex or a house with a basement that they can rent out. Buying investment properties such as that allow you to have close control of who lives in your property and how well they are taking care of it.

Buying an investment property is often times one of the best way to invest your money. Since you have someone else paying off your debt for you, it is almost as if you are getting free money. Buying investment property doesn’t come without risks though. You need to hope that you can find someone to rent the property to, you have to hope that they stay for an extended period of time, and you need to make any fixes or do any maintenance that comes up for your buy to let property investment.

How to buy investment property.

If you are looking for how to buy an investment property, then you have come to the right place. The first thing you need to consider is whether or not you can be a landlord. If you don’t think that you can take care of needed repairs, or if you don’t think that you can enforce the rules and deal with potentially bad tenants, then maybe it isn’t the best idea for you to buy investment properties.

If you may struggle with the above things, but you still are interested in buying a investment property, then you could consider using a rental agency to manage your property for you. You will have to pay them though, and that will definitely cut into your investment, but it also makes it a lot more hands off. This is especially important if you want to get a rental property that is outside of the area that you live.

One good thing to think about with regards to buying investment property, is how long you will be owning that property. The longer you own it, then more you will get back once you do decide to sell it, but that also means that you will be doing more repairs. Major parts of the house, such as the roof, will need to be fixed if you own the house for a long time period, and that can be a costly repair, and so you need to be forward thinking.

But, if you are only getting you investment property for a short time period, it could lose some value. In the economic crunch of 2008 and 2009, many people who bought investment property for the short term ended up losing a lot of money because they didn’t plan ahead.

Hopefully these tips have helped you out when considering if buying an investment property is indeed right for you or not. Make sure you plan, plan, plan, as many issues may arise, and with a plan in place you can keep your investment secure. But, if you don’t have a plan, your investment may be in trouble.

Property Investment

Is buying property the best investment for you?  Buying investment property is both an art and a science.  With property investments, you’ll want to keep some principles in mind.  Most who buy investment property do so with the intention of holding it and hoping it appreciates, but this cannot be called investment; it can only be called speculation.  The best property investment advice one can get is: “never try to predict.”

Be sure, when looking at investment property for sale, that it will be both safe and profitable beyond any reasonable doubt.

When you are looking at buying investment property, you’ll want to figure out its intrinsic value.  The intrinsic value is what the property should really be worth; it is not the same thing as its price.  We, as investors, are concerned with the investment’s value rather than its price.  When the price dips below eighty percent of the intrinsic value, you should buy.  This difference between intrinsic value and purchase price represents the margin of safety.  This will allow the price to dip to 20% below the value of the investment property before any loss in value occurs.

Profiting is of upmost importance; otherwise, the investment is pointless, no matter how safe.  Investment property loans should not be taken out unless one can be assured of returning back to him or herself more than the amount borrowed; this applies to both local and overseas property investment.  Find investment properties for sale which are in need of repair, and estimate the repair expenses.  Then, calculate the purchase price per square foot, and compare it with new construction cost per square foot in similar homes in the area.  The different between the new construction and purchase price should be double or greater the estimated repair costs.  When repaired to a like-new state, the money you put in should double or more.   This increase in equity will also add to your margin of safety, creating a safer and more profitable investment.

This allows one a sure way of increasing his or her equity; this equity can be traded in as a down payment on a larger property with more units.  This works with both residential property investment and commercial property investment; property investments in general must have a sure way of increasing one’s dollars to be classified as an investment, in our minds.

Property investment comes in two flavors: the true investment type and the speculative type (which is often confused for the investment type).  An operation, to be truly classified as an investment, must assure both safety and profit beyond any reasonable doubt.  Then, and only then, is it an investment.  Otherwise, the operation is speculative.