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Getting together the starting capital to fund your initial foray into the world of real estate investing can be intimidating, but there are ways to ease complications. To aid in making your first steps into real estate investing more confident and secure, let’s look at 4 ways to fund your first investment property in San Francisco.
Traditional Mortgage
It should come as no surprise that you can make the choice to simply go to a major financial institution and apply for a home loan in order to fund your first investment property in San Francisco.
The terms and conditions of each mortgage will vary, including if you currently own a primary residence, income, debts, and credit score. When it comes time to determine which type of mortgage you’re looking to acquire, do consider both fixed-rate and adjustable-rate mortgages.
Fixed-rate mortgages are certainly going to benefit an investor looking to hold on to a property for the long haul, while adjustable rate mortgages (ARMs) can provide lower rates for quick resale. Beware that Adjustable rates can change as often as monthly, so before signing the contract make sure to understand when increased rates kick in.
Leverage Existing Equity
If you’re already a property owner, you could look at opening up a home equity line of credit, or HELOC. In some cases, you could be able to borrow up to 90% of your current home’s value to be put toward the down payment of your first investment property in San Francisco.
In most cases, you can expect the interest rates of a HELOC to be higher than a typical mortgage.
Seller Financing
Something that has become more popular over the last few years is a formal rent-to-own agreement between a property’s buyer and seller. This situation allows for both buyer and seller to negotiate until they feel terms are amicable for both parties.
The common form of seller financing that we see these days is the contract stipulating that the buyer will purchase the property from the seller in a specified timeframe.
Find Outside Investors
Finally, to purchase a investment property, there is always the possibility of hunting down capital from investors willing to trust you with their investment.
Bringing in outside investors can range from providing you with total autonomy to constantly micromanaging your every move. Take this into consideration when determining how you would like to operate, and be sure to meet with any investors to discuss the details you have worked out prior to signing on the dotted line with anyone.
Help Finding Your First Investment Property in San Francisco
If you’re looking to purchase your first investment property in San Francisco and need help, contact us today at 415-830-1423!
