4 Tips for Getting an Investment Property Loan

Getting an investment property loan is typically much more difficult than getting a regular mortgage. However, these loans are commonly issued to many individuals. Here are a few tips for successfully getting an investment property loan.

1. Work with Multiple Lenders

Many people that have the idea to get an investment property loan work with only a single lender. They go through the entire loan application process with the lender and then are not approved. At that point, they decide to give up and forget about it. Instead of working with only a single lender, you should shop around and try to find a lender that is willing to work with you. Every lender has different lending criteria that they use. Therefore, just because you are denied at one lender does not mean that you will be denied at all of them. Keep trying even if you get declined, and eventually, there is a chance that you will find a lender that will offer you a loan.

2. Pay off Debt

Before applying for a loan for an investment property, you should consider trying to pay off your debt. Lenders really scrutinize your debt-to-income ratio when trying to get an investment property loan. If you do not meet the criteria that they have set for debt-to-income ratio, they will not be able to offer you a loan. Therefore, you need to increase the odds in your favor by lowering the amount of debt that you have. If you have any credit cards or other accounts with balances, you need to make every effort to pay them off. This might require you to wait several months before applying for the loan. However, it can significantly increase your chances of getting approved.

3. Look at Quality Property

You also need to consider looking at quality investment properties. Lenders put an emphasis on the quality of the property that they will be investing in. Typically, they do not like to put large amounts of money into property that needs to be fixed up. They like to see property that is in good condition and is valuable. Therefore, you should try to put an emphasis on selecting a quality property. If you find a property that is undervalued and in good condition, it can significantly increase your chances of getting a loan for it.

4. Consider Private Lenders

If you are unable to secure financing through traditional lending sources, you should consider checking out private lenders. There are many private lenders in the market that may be willing to lend you the money that you need. These are individuals that have excess money that they want to lend. Most of the time, private lenders will not have the strict criteria that traditional lenders do. Most of these private lenders will make their own lending decisions based upon their personal preferences. The interest rates will typically be a little higher with private lenders, but they could allow you to get the money that you need when other methods have failed.