Today we are talking about how to get financing to buy apartment buildings or investment properties. Most people think the only way to do this is to go to a bank, put 20 or 25 percent down and go through all the paperwork at the bank and then hopefully get approved for financing. This is not necessarily what most investors do because dealing with the bank can be difficult. There are different options available to you that can help you buy more real estate faster.
We do a lot of owner financing. A lot of times, you will find an owner selling a property and that owner has had this property for 20 or 30 years, and doesn’t want to give up the cash flow it produces. They know if they sell the property, they will pay capital gains tax, a broker commission and other expenses. So there are advantages to owner financing, and they can sell you the property with a low down payment. Most of them are willing to provide these favorable down payment terms, unless they need cash. Then, you just pay them every month. Some of the balloons on owner financing are 10 or 15 years, where a bank would be five years. So, you’re helping the owner and yourself. The owner comes out ahead, you come out ahead and everyone enjoys favorable terms. If the owner wants to retire and doesn’t want to manage the property, there is a steady income stream provided. We use this financing method a lot.
Owners who have no equity will also be willing to consider owner financing because they don’t have the equity that will put them ahead when they have to go to closing. But they want to get rid of the property, so they are willing to sign the house over to you and walk away.
The other thing we use in our community is private funds. A lot of people want to invest but don’t want to do the work themselves. They will give you money and let you do all the work and set up a 50/50 partnership. That gives you what you need, and everybody has something to gain from the financing arrangement.
These are just a few of the ways we can manage financing for investment properties. We have many other ways to help you, so contact us at Kirch Property Management.