By: Skyler Moore
Financing Denver investment property can be difficult in any real estate market, especially if the investor is a business owner that shows a fluctuating income. Banks are very strict with lending criteria currently and in my opinion often try and find a reason why not to lend money, opposed to reasons why they should lend money to a borrower. I have seen individuals with enough liquid cash to cover the loan have difficulties qualifying.
A growing number of real estate investors feel now is a great time to take advantage of the blood in the streets and purchase distressed assets. Recently, my group re-habbed a property that offers over $550 a month in net cash flow with a purchase price of $110,000. That is a 6% return on a cash purchase! At 25% down, with 75% financed, that is a 24% return on investment in the first year based only on annual cash flow! Investors will not find those returns backed with a real asset nearly anywhere. Most properties with the proper research can be purchased turn-key below replacement cost.
Keys to Financing Denver Investment Property
The key to successfully financing investment property is working with a knowledgeable loan originator or broker who understands the investment market. Often, investors approach their personal bank and inquire about a loan. While investors may be successful, not many loan originators/brokers know much about investment products. Rather, they understand cookie cutter Fannie Mae, FHA and Freddie Mac loans that their financial institution originate and then sell to the secondary market.
Most loan originators at financial institutions do not fully grasp the investor mortgage market because they have enough primary purchase loans on their desk. The pipeline for easier and familiar loans are on their desk and receive attention, opposed to the more difficult and less known investor mortgages. Having an in depth knowledge about the investment market comes only from being in the trenches and analyzing deals on a regular basis.
By understanding not only what the current real estate market conditions are like, but also the investor and primary buyer demand can a loan originator/broker fully gauge the quality and ability to fund a deal.
The Buyers Utopia Denver network is comprised of team members that not only understand the investor mortgage market, but also understand the current market conditions and potential of investment deals. If you are seeking an investment loan, or investment loan advice, contact us today.