Properly Financing Rental Properties
Do you currently own a couple rental properties? Or maybe you’re looking to get started purchasing renting properties? Here are some financing tips for you. Over the past 3-4 years we’ve learned things the hard way from owning rental properties. You don’t have to learn the hard way - just take our advice!
Buying the property:
Get a hard money loan, a private loan, or maybe your own cash if you have that ability. Don’t worry about dealing with banks. You need to nail down an easy process. When a good opportunity comes you need to jump on it quickly!
Even if the cash costs a little more we recommend using a hard money lender or private lender just to take down the property.
When you do refinance, because eventually you will need to do this with a bank in order to pay off the lender and take out cash - make sure you’re not over leveraging yourself on these. Oftentimes the bank will give you more than you need, so you just need to be careful to make sure you aren’t over leveraging in this situation.
Also related to cash flow, you need to make sure there is wiggle room and you have a good spread. There will always be unexpected expenses to account for. Finally, make sure you have good equity cushion in these properties and don’t over leverage them because if you need to unload it quickly you’ll need to make sure you have that ability.