Being a landlord can be a great way to bring in extra income, but it can also be difficult if it’s not done correctly. The first step, though, is getting the building where your tenants will reside. Buying an apartment building may seem like a daunting task, but if you perform your due diligence and work with a good Realtor, you can find a place you love.
Then, you just have to get the financing. Ideally, you’ll want to talk to the bank or other lender before you fall in love with a great building, so you know your price range. Depending on your financial situation and whether you own other investment properties, you may not want to work with a traditional lender. Fortunately, there are plenty of other options if a traditional loan from a bank isn’t attainable for you or doesn’t appeal to you for whatever reason.
That doesn’t mean traditional loans aren’t good options for many people who want to be landlords, though. They can be more straightforward than other choices, and often have good interest rates, depending on the specific lender. However, they may not all be receptive to investment properties. Another way you can finance your apartment building purchase is through private lenders. There are plenty of people who have extra money, and who will lend to people who are working on building a portfolio.
These lenders often have very different terms than what would be seen at a bank or other standard lending institution, so it’s vital to read the contract carefully. Interest rates can be higher, and the amount of money you’ll need to provide as a down payment is also often much larger. For some would-be landlords, though, that’s not a problem, and can help them get started.
No matter whether you choose a traditional lender or a private investor, it’s very important to make sure you’re financially prepared for the purchase of your apartment building, and that you’re making a good investment. That means getting a good inspection, having an appraisal done, and getting a completed, new survey – even if your lending arrangement doesn’t require those things.
They should be done for your own peace of mind, and you should also talk with more than one lender. The difference in interest rates and other terms can greatly affect how much you’ll pay over time for your apartment building. Then, there are also renovations to consider. When you finance your apartment building, you may need to take out a loan for more than just the purchase price. There are loans that can include renovations and remodeling, which can help you get your apartment building ready for tenants.
Before choosing that option for financing, though, make sure you get estimates on the work that will need to be done. That way, you can seek out and secure financing at the right level, so everything you plan on doing to the apartment building can be completed, and you can start bringing in revenue from tenants as soon as possible.