As lawmakers are looking to ease the burden of housing insecurity in Maryland, investors have a great opportunity. Real estate investors can make money by funding new places for tenants to live.
Owning real estate costs money that you might not have. No worries! There are plenty of real estate financing options to choose from.
Keep reading to learn how you can start investing in Rockville, Maryland.
Conventional Mortgage (Bank Loan)
Real estate financing doesn't get any more basic than traditional home loans from the bank. You would navigate this option like you would when you buy a home.
The requirements for a loan of this caliber can be strict. These loans aren't backed by the federal government, so you'll need to follow guidelines from different lenders.
Lenders often require a 30% down payment for investment properties. This might be more or less depending on your credit score and yearly income.
Lenders sometimes expect their borrowers to have a significant amount of cash set aside. This is to protect them from unprecedented complications in the investing process.
Hard Money Loan
Hard money loans have a shorter payment period than other loans. If you want to buy a rental property to house long-term tenants, this loan is not the best option for you.
A first-time landlord looking for a long-term endeavor should work with a professional property management company.
Instead, a hard money loan is commonly used for real estate trends like fix-and-flip properties. While these loans are more particular, there are some benefits.
Lenders tend to focus more on investment profitability than credit and income, although the latter will still be a factor.
A lender will go ask for the property's ARV (after-repair value). They may send someone on their team to estimate this indicator.
Private Loan
A real estate investor can seek financing from an individual rather than a company. This is referred to as a private money loan.
You might find that a friend or family member wants to invest in your real estate endeavors. Not everyone feels comfortable borrowing or giving out money to family or friends.
If this relates to you, consider visiting real estate networking events. There are oftentimes that investors come to these events to find opportunities to grow their own wealth.
Because these are loans from individuals, the terms and requirements vary greatly.
It's important to know how to spot a fake lender and avoid predatory lending practices. You don't want to be stuck in a hole that you can't get out of.
Real Estate Financing: What Works for You?
Investing in real estate in Rockville, Maryland, is a great option for those looking to build a portfolio. Some real estate financing options are better than others.
At PMI Maryland Solutions, we help investors find the best properties to invest in. With a rental analysis, we can calculate how much a specific property can make you.
For over 20 years, we've been helping local landlords like you achieve their investment goals. You can check out our homes for sale or speak to a real estate agent who can identify your needs.
Get your free rental analysis today to get started.
