Financing Options

Going to the bank for loan…

Investor Loans Traditional Financing: There are hundreds of investor loan programs out there for buying rental property. Investors can buy one house at a time, or there are some programs that will finance up to 5 investment properties at once. Down Payments range from 5% down to 30% down, and interest rates range from 6%- 9%. With some of the programs you do not have to prove your employment or income, and they are strictly credit score driven. Other programs meet the needs of the credit challenged investors with concessions like larger down payments or higher interest rates. For those of you looking for conventional financing, we encourage you to talk to your bank as well as a few loan officers in order to find out what kind of loans they can offer you as you search for the best way to acquire you rental properties. Especially now that the credit requirements have tightened up.


Selling your current Investment Property…

1031 Tax Free Exchange: A tax free exchange will allow you to sell an investment property and not pay taxes on the profit. Since we are not experts in this area, suggest you elect a qualified 1031 coordinator prior to selling your property. The proceeds from the sale will go into an account set up by your coordinator. You then have 45 days to identify the property to exchange your money into and you have six months to close on that property. If you do not identify a property in the 45 days after you sell your property you will be forced to pay taxes on those proceeds. If you do identify a property in those 45 days and close on it you will avoid all tax consequences and have your money working for you again.


I’m Paying CASH…

No loan costs involved for you. You could have the money in an equity line on your house or cash you have saved up. You could be getting 3 or 4% on your money in your savings account. You are a cash buyer.

Proceeds from you Primary Residence Sale: You can sell your primary residence and under the rules of IRS Section 121 as long as you have lived in the property for two out of five years any profit made on your residence is tax free. You can use that tax free money and invest in real estate which could provide you in other tax write offs for the income you are taxed on currently.


Working your Retirement Plan…

Using your 401k/Pension Plan/IRA/Roth IRA: This is a very specialized area and we have had our experience rolling 401k into a Self Directed Roth IRA and then purchasing rental property with it. However with each plan and your own personal set up you may be responsible for fees or penalties associated with that retirement plan. For that reason we recommend you call a professional. Equity Trust Company is one of the leaders in the industry for assisting people in using leveraging their retirement plan into real estate. http://www.trustetc.com or 440-323-5491.