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Wondering what is the best way to finance an investment property?

For an investment property (not to live in) should I use a home equity line, traditional fixed rate 30 year mortgage or something else. Let's say I want to hang onto it for maybe 10 years....

Public Comments

  1. Use conventional financing. Do not, repeat: DO NOT, use your home equity loan. Save that for emergencies. See if you can get a 10/1 ARM since you only want to keep the property for 10 years you can sell it as the ARM gets close to the first adjustment period.
  2. I would not take out a HELCO on my residence for any reason. Do not invest unless you have 20% cash down payment then get a 30 year traditional fixed. If you hang on to it for 5 years it will be worth it. Good luck!!!
  3. Alright well if you only plan on hanging on to it for about ten years, you can get into a 10/1 or 7/1. The rate will be better than a thirty year and a home equity line is going to be much higher. My advice is to find a mortgage broker who can shop around for you and get you the best for your situation.
  4. This answer, as many financial ?'s, is "It depends" There are many factors to consider. Are you looking for a "Cash Cow" or long term appreciation. You have to look at all your options and run them out a few years to decide which is right for you. Ex - If you think "Cash is King" and the property will definitely rise in value over the period. Than I might try to get a long term interest only payment that would give you a smaller monthly payment and, hence, raise you monthly cash flow. I have this type of financing on one property and am bring in over $475/mth on a 2-Unit apartment that has increased in value almost 50% in the last 3 years. Otherwise get a long term loan with a low fixed rate. Your payments will be higher, but you will be buying down the equity and end the end you will have a low mortgage pay-off, but no cashflow. It all DEPENDS on the market and your cash needs!
  5. I say you should a Hybrid option or an option ARM for it.... remember, in an investment property you want the most cash flow possible.... and these programs allow you to save a lot, the bad thing about them is the negative amortization.... not too bad in a Hybrid Option shoot me an e-mail w/ more questions
  6. 30 year fixed! It is .125% better than the 10/1 ARM on my rate sheet. What if you decide to keep it?
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