WILLOW BEND MORTGAGE

6 Tips for Growing Wealth Using Investor Loans

“Ninety percent of all millionaires became so through owning real estate…”
— Andrew Carnegie

Real estate can be a great addition to an investment portfolio.

Investment property purchases can be structured for either long-term appreciation or as a source of immediate cash flow. But getting started and growing a portfolio can be overwhelming. Below are 6 tips for how to begin and grow your own portfolio.

1. Know your goals. Most successful investors buy with a plan and a purpose for each specific property.

• If your goal is positive cash flow, you need to buy in a place where the rents are high. That typically means that housing prices are also high so you will need to have a greater down payment and more funds for closing costs.
• If your goal is to purchase the property as a long-term investment strategy, you will probably want to buy in an area where the prices are more affordable, and the expected rents cover the payment. This strategy allows you to invest in properties today with long-term gains in mind.

2. Do your research.

What are the property taxes in the area you are considering? How much is property insurance? Bear in mind that investment properties do not qualify for property tax exemptions so you will be paying the full, unexempted tax rate for each property. Also keep in mind that you may need to pay for additional insurance riders, like rent replacement coverage in case the property is damaged and cannot be rented for a period of time.

3. Learn the market.

Online apps can help you get an idea of how much similar properties to the one you are considering are renting for. Like housing prices, rents are local and market driven; if you are actively looking for a property, ask your Realtor to run some rental comps for you. Ideally, the market rents should cover the mortgage, the property taxes, the insurance and any HOA with at least 1:1 coverage although is it possible to obtain financing when the rents are lower than the total PITIA (principal, interest, taxes, insurance and assessments.)

4. Get familiar with the financing.

Since investment properties do not offer homestead protections to the owner, lenders typically want to see that you own a primary residence before you purchase an investment property—particularly in states like Texas that offer significant homestead protections. In addition, in order to qualify for some loan products at preferred terms, the underwriter may want proof that you have at least 12 months of experience as a landlord with at least one rental property. Many people obtain their first rental by converting their departing home into a rental when they buy their move up home. Once you have 12 months of documented experience as a landlord, you have better financing options available to you.

5. Know your options.

There are a wide variety of investment property loans on the market—from conventional investment financing which provides the best rate and terms to DSCR (Debt Service Coverage Ratio) loans for experienced investors that allow you to qualify to purchase or refinance an investment property based solely on the cash flow of the property. Each product has strengths and weaknesses, so it is important to work with a loan originator who understands not only the products but also your unique situation.

6. Work with an expert.

At Willow Bend Mortgage, we are skilled in a wide variety of products to help you build and grow your portfolio, whether you are buying your first rental or your 30th. Whether you need a low-rate conventional mortgage or a DSCR loan based on market rents to purchase a new property, or cash out an existing one, we have you covered. As an agency-direct lender experienced with high net-worth borrowers, we can underwrite complicated tax returns. We also offer DSCR loans with no restrictions on the number of properties currently owned and no restrictions on recent rapid acquisition. We offer very competitively priced DSCR loans for 1-4 unit properties with positive cash flow and we also provide DSCR products that allow negative rental down to .75% and we can close multifamily properties up to 9 units.

With over 32 years of experience, Willow Bend Mortgage understands your needs. We know that as a busy professional your time is valuable, so we combine cutting-edge technology with concierge service to make getting your mortgage easy. We are not mortgage brokers—we are a full-service mortgage bank with our own underwriters, processors, closers and funders. When you work with us, you will never be just a phone number on a call center line. Our loan originators are dedicated, skilled professionals with the resources and product knowledge to help make your investment a reality in the 12 states we serve—Texas, New Mexico, Colorado, Oklahoma, Georgia, Arkansas, Indiana, Kansas, Florida, Tennessee, Alabama, and Louisiana.