Real Estate Investment Financing Strategies : 90% Investment Loan

March 10, 2008 | By | Reply More

Real Estate Investment Financing Strategies : 90% Investment LoanThere are many different ways to finance an investment property. Typically, we will borrow cash from a private investor or hard money lender to purchase a property and renovate it. Once the renovation is complete, our goal is to get that cash back out. So, we either sell the property or refinance it. REMEMBER, the more cash that you have sitting in a property, the lower your rate of return.

Last year, most of the refinances that we did were at either 75% LTV (Loan to Value) or 80% LTV. We know that the lower the LTV, the more cashflow we will have. But the higher the LTV, the more cash in hand. I had not heard of an investment loan option higher than 80% LTV until recently.

We bought a property several months ago and just finished the renovation. When meeting with our mortgage broker, he mentioned a loan program that was a stated income, stated asset investment loan at 90% LTV. We were looking at pulling out some additional cash on this property so we gave it a shot.

We closed on our loan today and walked away with a check for $43,065.71. And that’s after we paid off everything that we borrowed to do the deal which includes the purchase price, closing costs, holding costs, renovation expenses, and everything else. By the way, the loan was through Wells Fargo. The way the mortgage industry has been going though, who knows how long that loan program will be around.

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Category: Real Estate Investment Financing Strategies

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