Investment Property Loans Myths and Facts

Investment Property Loans

Investment property loans can be a great way to build your real estate investment portfolio, but there are some myths and facts associated with these loans that may cause confusion for a number of investors.

Myth #1: Everyone who uses these loans will become a millionaire in no time

The fact is that there are many benefits to these investments, but they do not offer a “get rich quick” scheme. Industrial, commercial, and residential investment property requires time, money, and effort to be successful and hard work is needed for your investment to pay off. Investment property loans are not for everyone, because there are certain risks involved as well as benefits.

Myth #2: You must have a perfect credit score to be approved for investment property financing

The real fact is that you may qualify for approval even if you have poor or bad credit, however, you will usually pay higher rates for investment property loans and will not get terms that are as good on the loan if your credit is not considered excellent. This is true regardless of the property type that you are considering financing for, whether it is agricultural, residential, industrial or commercial property for sale. The fact that a poor credit score will cost you more, but it will not usually prevent you from receiving a loan.

Myth #3: It is better to put nothing or very little down

This is actually a very common mistake. The fact is that the more you put down on any investment property you purchase the less you will need to borrow from the lender, and this means less interest is charged on the principal and you start off with more equity in the property. You may also benefit from a lower rate because you put more money down. Whether you are looking at retail property for sale or another property type, you should make a down payment as large as possible.