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I am looking to purchase an income property. What is the best kind of loan to get?

I am wondering if I should just get a business loan or what kind of loan I should get to purchase a house to flip?
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December 28 2010 - San Antonio
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Profile picture for ricnex
yes i would really recommend
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January 23 2011
My favorite loans are for home investments right now are Fannie Mae HomePath Loans.  Smaller down payments, and they offer home Renovation options.  You are limited to their inventory.. but a lot of them are great investments.  

For non-homepath homes...  Your best bet for a flipper is a hard money lender.  In my case.. when I was flipping homes like a mad-man... I had a line of credit with my bank...  so on paper.. I bought these homes "Cash" and when I flipped it..  I simply paid off the line of credit.  You get the cash faster, there is no closing costs and you can protect your profit better. 

You really want to get out of buying homes with mortgages as fast as you can... closing costs are basically your money going into someone elses pocket. 

Hope that helps :)
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January 12 2011
KB,

Good question KB.

Keep in mind that if you want a residential loan for your investment property (I'm assuming a 1-4 unit residential property) that your financing options should be much easier if you buy the property in your own name versus holding Title in a LLC, S-Corp, LLP, etc. name for financing purposes.  IF you hold Title in a corporte entity name you will have to get a commercial loan from most likely what will be a traditional bank.  Also you'll likely only get around 75% LTV and MUCH more scrutiny will be placed on the income/assets of the entity AND yourself as the personal guarantor for the loan (ie. commercial lender will want to assets in addition to income).

If you were to buy the property in your own name, you would likely get up to around 85% financing for a single family investment proeprty and closer to 75- 80% LTV for a 2-4 unit property. 

One more thing to think about is that you will have no problem getting 30 year money if you buy the property in your own name versus going to a commercial lender which will likely give you only 15-20 year money (ie. higher payments via shorter amortization).

I hope this helps.

Good luck.
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January 02 2011
You want to find the loan program which best balances out of pocket expenses and the continuing debt service, viewed through the lense of how long you plan to own the property.

To determine the best loan you need to look at you total financial picture, to understand and evaluate your options.
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December 29 2010
Flipping homes requires nerves of steel in this economy. You need to be very careful. Most lenders are going to require 25% down and your closing costs can easily eat away at your potential gains.  The absolute best way to flip a house is to have a private investor or "money man" and then split the profits with him.  You will not get rich quick, but conceivably you can make a few extra dollars a year.  Do not quit your day job! Good Luck!
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December 29 2010
Investor 80% loans SFR only with convential loan limits. WOW, flipping in 2011 with house prices trending downward everywhere.  I like risk, but cash flow could be alot more profitable


David Cooper [contact info removed by moderator]
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December 29 2010
Generally 30 yr fixed....investment will be 20% down. That's what my investors prefer.
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December 29 2010
You are specifically asking what type of loan to get and that is clearly a question that a lender should be able to give you guidance on.  There are many factors to consider, but ultimately when it comes to financing, you are really looking at the cost of money.  Therefore, it would only make sense to allocate funds towards an income producing property if you are able to earn greater than the cost of the loan.  Thus, you should run cash flow projections using conservative numbers to see if it all makes sense.  This gets a lot more in depth than your specific question, but I wanted to give you some food for thought.  Best of luck!
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December 28 2010

KB$23,

  Hello.  Excellent question.  I think the easiest and best way to invest in home, is by getting a home loan as compared to getting a business loan.  The first thing you should do is seek out a mortgage lender and discuss with them your credit, income and type of properties you plan to purchase.  I can recommend an expert in this field.  I think the market is ripe to do some flipping if you are a savvy investor.

Keep in mind that we are a non-traditional type of real estate company with the best buyer rebate program in town.

[Self-promotional content and contact information removed by Zillow moderator. Please see About Zillow Advice and our Good Neighbor Policy for guidelines]

Happy House Hunting,

Gavin St.Louis
Managing Broker/Owner
BuyersHouseRealty

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December 28 2010
Depends on how long you intend to own the property and for what purpose.  Being an investment property - you will have limitations on the type of loan you can get.  I'm not a lender and can't talk about their products, but what I can do is recommend 3 lenders you can discuss your question with.

Kim Dimmett
Realtor, Keller Williams

[Contact information removed by Zillow moderator. Please see About Zillow Advice and our Good Neighbor Policy for guidelines]
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December 28 2010
 
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