Securing a real estate investment loan enables proactive employees to buy their first investment property sooner.
Below are the steps to secure investment mortgage loans required to buy multiple retirement income properties:
Step #1: Save The Equity Contribution
As discussed in our introduction to investment property loans, most banks demand equity contribution as prerequisite for loan applicants to qualify for approval to receive investment mortgage loans.
Since that is the case, the very first step in your preparations to secure a real estate investment loan is to establish a savings culture.
Start saving money for retirement every month.
Establish a separate savings account for your retirement savings and send a fixed amount (which is a percentage of your salary) to that savings account every month.
The money the save in your retirement savings account over a period of time can then be used as your equity contribution when applying for a real estate investment loan.
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The procedure and requirements for securing investment mortgage loans vary from bank to bank and country to country.
Many employees thinking of securing an investment property loan ask their friends and family for advice.
There is nothing bad with soliciting for and listening to the experiences of friends and relatives with regard to applying for and securing loans. Their experiences may give you some ideas of what kind of pitfalls to watch out for when it is time for you to apply for the mortgage loan you desire.
Nevertheless, we recommend that you actually speak with representatives of the bank you wish to transact with.
Start by speaking with your account officer about their real estate investment loan requirements and take note of specific things you need to do to meet those requirements when it is time for you to apply for one.
Next, visit other banks in your country that have a good reputation with the general public to find out what their mortgage loan requirements are.
Yes, do not stick with one bank.
Look out for the bank that will offer you the best deal on the mortgage loan you desire.
Banks will normally require mortgage loan applicants to present the title documents of the property they wish to buy with the real estate investment loan they have applied for.
This is part of the vetting process by banks to ensure that applicants really intend to purchase property with the loan being applied for.
Consequently, you must present some form of documentation for the property you wish to buy to the bank.
However, banks do not want just any kind of property documents.
The title documents for the property you intend to buy that are acceptable to the bank must be title documents that are legal and required by the bank.
For example, in our country (Nigeria), the property title documents accepted by banks for the purpose of obtaining real estate investment loan is Certificate of Occupancy (C of O) issued by the state government where the land is located or by the federal government (if the property is situated in a federal land).
Therefore, step 3 in the process of obtaining a mortgage loan requires you to do two things:
1. Get a reliable and trustworthy real estate consultant to show you around and help you find the property you will love to buy
2. Ensure the property you fall in love with has title documents acceptable to the bank that will finance the purchase and
3. Get a copy of the title documents and present it to your loan officer
What if you find a property you love but the property does not have title documents that is acceptable to your bank?
Simple. It means the process will not approval a loan for you to buy the property.
But can you still buy the property?
Of course, you can but you have to do so with your own money.
This retirement planning guide recommends that you buy only property with appropriate legal documents (or documents that can be used to secure legal documents from the federal or state government) because you could lose all of your real estate investments if the property you purchase do not have appropriate legal documents.
Obtaining a real estate investment loan to buy your next investment property will ensure that you are able to buy the property sooner. And the sooner you can acquire one property, the sooner you will start planning to acquire more.
Remember our recommended goal for real estate investing: The goal is to buy as many properties as possible while still in paid employment and then to enjoy financial independence after retirement from the income generated by these real estate investments.
For that to happen, you need to take advantage of the leverage that investment mortgage loans provide.
Therefore, do everything possible to qualify for (and obtain) investment property loans as many times as possible during your working life.
That is the secret to a wealthy retirement life.
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