Real estate investment offers compelling advantages: multiple revenue streams, capital preservation, and long-term value retention. However, many potential investors find themselves priced out of this opportunity. If you’re considering real estate as an investment vehicle in South Carolina but require financing assistance, be sure to consider these 4 essential tips for financing your investment property in South Carolina…
Investment Property Financing Tip #1
Interest rates are the bank’s way of making money on the money they lend you. Although interest rates are expressed as a percentage, it will ultimately add up each and every month that you need to pay off that loan! Even a small increase in the interest rate, from 3% to 4%, for example, could mean thousands of extra dollars that you’ll pay over time.
Each bank sets its interest rate based on a number of factors — some of which are outside of the banks control but some of which are entirely in the bank’s control. If you want to borrow money from a bank, you’ll need to pay interest but you may be able to adjust the interest rate you pay based on certain factors, including your credit score and the amount of money you can use as a down payment. When the bank tells you what their interest rate is, ask them how you can lower that amount.
Investment Property Financing Tip #2
Banks are businesses and YOU are their customer. That means banks compete with each other for your business. So find a bank that is willing to work with you on your investment property financing. A bank might offer you an attractive interest rate if you do business with them.
You might also find that larger banks see you as “just another customer” while smaller banks might be willing to give you better financing terms because they want your business.
Investment Property Financing Tip #3
Don’t overlook the fine print in your financing terms! These details can significantly impact your investment. Be particularly cautious about promotional interest rates from traditional lenders that later increase substantially. If you’re purchasing a property to renovate and flip, you might complete the sale before the promotional period ends, maximizing your borrowing efficiency. However, if you’re planning a longer-term investment when the interest rate increases, you must factor these changing costs into your profit calculations to avoid unexpected financial strain.
Investment Property Financing Tip #4
Be aware that property financing is not just done through large banks. There are other ways to finance your property, including seller financing, partnering, and even paying for your investment property with your IRA or 401(k). So you have plenty of financing options if you are not ready to buy the property with cash.
Summary
Use these 4 tips for financing your investment property in South Carolina and you’ll be able to acquire more properties and build your investment portfolio faster.
At Columbia Cash Home Buyers, LLC, we help investors acquire investment properties with cash, with financing, and in many creative ways, including inside your IRA. If you’re thinking about investing, talk to us about how you can acquire your next real estate investment. Click here and enter your information or pick up the phone and call us at 803-592-2353.