Financing Property Investment: How to Get Started

25-01-2016 | Anne Seymour |

Housing markets the world over are recovering from the crisis in 2008, and as a result, now is a perfectly good time for you to get involved in the industry, whether you’re looking to buy and then rent out (buy to let), or you want to flip some properties. You will of course need some business acumen, but there are few better investment opportunities available if you’ve got the financial means and some time to make things work. One of the first things that you’ll need to think about is how you’re going to finance the purchase of new properties, and we’re briefly going to cover that here.

Using Cash

Now, if you’re already a seasoned investor, then there’s a good chance that you’ve actually got the capital to purchase outright, meaning there’s no hassle and no interest to pay. However, this might not be a good option, because it means a significant portion, or potentially all, of your cash is tied up. Taking out a mortgage instead could mean that you can invest in multiple properties at once, and you have only a monthly commitment and more liquidity.

For most people looking to get into property, a mortgage will not only be the best option, but the only one. Working out your financial options in this area however can be tricky.

Sourcing the Right Mortgage

Now, you do have the opportunity to simply seek out your own mortgage and take it out. In some ways, this could be the cheapest option, because then your only costs will be the ones directly associated with the loan. However, this isn’t always the best (or cheapest) decision – there’s a reason that mortgage advisors are so widely used.

Essentially, using a mortgage advisor means that you’ll be able to find the right product for your situation, which often offers a financial benefit. They’re simply going to be better at scanning the market than you are, and crucially, they often have access to mortgages that are not available direct to the general public.

So if you’re about to take the plunge into the world of property investment, try to maximise your leverage by seeking loans rather than paying cash, and always hunt high and low for the best deals – you’ll add considerably to your profits if you do.

About Anne Seymour

Anne is a young webpreneur, interested in all things related to money: earning, investing, saving. She's paid off her student loans and now is looking forward to doing a lot of writing and traveling.

If you like what you are reading, please share. Thank you :)

Recent Comments

  • Claire D.

    April 8, 2016 at 8:47 am

    I always said that taking out small loans is not worth it, because in the end you end up losing money with interest rates &such. However, I believe the 1 loan that is worth the hassle is a mortgage. I could never imagine having enough money set aside to buy one, but if I ever did I’m pretty sure I’ll invest it all at once in one property.

    • Ramona

      April 8, 2016 at 11:41 am

      Yeah, a house is not something you can easily save for. Hence the reason I’d also get in debt, if needed. It wouldn’t be easy, but it would make sense for me to pay for a house that’s gonna be mine.

    • rz3300

      September 14, 2016 at 7:42 pm

      You are right in being skeptical on taking loans, and it would probably be best if everyone else practiced the same amount of caution that you seem to have. You need to think about a loan like it is, you are paying for the use of money. A home is certainly the one thing that I think would be a necessity for a loan (unless you have the capital to buy one), but with that you need to have a lot of care and patience with what you choose. Explore all the options, find good rates, talk with good people who know the market…all of these are needed to make an informed decision.

  • Rebekah

    April 21, 2016 at 8:35 pm

    In my standpoint of view, there’s no way for me and my husband to get into investment properties without borrowing millions of dollars for a start-up capital for buying, building, renovating and refurbishing to sell. A lot of people I know do, and they run like leg-work to make their multi-million construction and housing businesses going and profiting.

    We’ve paid off our house 7 years ago, and it hasn’t improved since. But with mortgage debt getting out of the way, we may plunge into borrowing called, “bridging loan”. But we need to borrow to do renovations to improve our debt-free house to increase its selling value, hopefully more than the amount of the house we would be buying. But the feasibility of that move would be remote.

    • rz3300

      September 4, 2016 at 9:40 pm

      You are right, the upfront capital that it requires is intimidating, and off-putting for most people I would say. That said, though, there are certainly options out there and ways to get started. I am curious to learn a little more about these “bridging loans” that you mention, and I am not at all familiar with those. Glad to hear that you have paid off your house, though, and that is always a good start. Interesting stuff, and thanks for sharing.

  • tabby

    May 14, 2016 at 12:21 pm

    I somehow wish I could get into property investment. Currently, I only have a house which I took out through a mortgage loan because I wrongly believed what the agent said was a good investment for me. I didn’t study much before. I didn’t know that what I was getting into wasn’t an investment at all, as it’s not generating me money as I live in it. Anyway, had I known 9 years ago what I know now, I would have saved more money to pay at least a big portion of the property’s price. While the monthly mortgage was affordable, I’d say that the total monthly payments for the entire 25-year term was MORE than the property’s value.
    If I had to redo things over, I would pay a bigger amount in cash, and take out a loan for the rest on a much shorter loan term. That way, money lost on interest payment won’t be that great.
    tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

  • I_love_saving

    August 4, 2016 at 1:32 am

    Investing in a rental property is one of the best financial decisions you can make. My parents did that years before I was born. The decision they made back then paid for my college tuition. Sadly, my parents will die someday. They feel more secure knowing that my siblings and I will have some rental property as inheritance.

    This is a great business to be in. Even if the economy goes bad, people will always need a place to live. There will always be a demand. Also, my parents work for themselves.

    Theres another option if you aren’t ready to buy. If you or your spouse have maintenance skills and people skills, you might want to consider going into property management. Sometimes landlords will let you live in an apartment in exchange for labor. The money you save could go into buying your own home or rental property.

  • rz3300

    August 14, 2016 at 12:08 am

    Well nobody ever really wants to think about the financing aspect of real estate and owning property, so that just makes it even more important to have some nice, clear guides to follow. This is a good place to start, and I wish that I had something like this when I was getting started out….might have saved a couple dollars and some time. Thanks for sharing, though, and I am sure that a lot of people will benefit.

Leave a Reply

Your email address will not be published. Required fields are marked *


CommentLuv badge

©2018 Personal Finance Blog. All Rights Reserved. Created by The Medically.