The 7 Insider Bank
Secrets To Getting The Property Investment Loan You Want
Investing in the property or
real estate market is one of the easiest modes of investing and yet it can be one of the most complicated too.
When you choose to invest in property then you have chosen to deal with many business
financiers. You have, in fact, elected to deal with the vendor financier, the venture capitalist and even
the banker who will, in most of the times, fund projects either in whole or in part. Bankers, especially, will
investigate title or conduct a search and they may even do more depending on the funding
required.
Let’s take a look at the 7 insider bank secrets that will help you
get the property investment loan you need:
1. Make sure you have Proper Title to the Property
As an investor, you must be able to prove to the banker that the
property actually belongs to you.
The detail of title is one of the most critical elements for lenders of all
types and especially banks.
You may know that in Australia, a large percentage of land is owned by the
government (72%) while the population holds part of the remainder. As
most people will usually use the property that they have to secure the loans, it will only be proper for you
as the borrower to “clean” your title from any encumbrances before hand.
2. Enhance your Property Equity
Property equity basically means the difference between the true
market value of the home and any outstanding loan to the banks. The more
equity you have in your property the more the chances of getting on the good side of the
bankers. Equity will also depend on whether the loan advanced was through a reverse mortgage or the
conventional type. Advice on these will be of much assistance.
3. Present a Business Proposal
Presenting of business
proposals to the lender is a sure way of convincing them to advance loans. These will contain the nature
of property business that you are engaged in, that is, buying and selling, developing to sell, developing to
let/rent or simply developing.
Investors will also want to know your management skills and this encompasses
your staff if the property investment loan is being advanced to a property investment
company.
4. Try to Self Finance part of the Investment
A property owner who seeks 100% financing for their property
investment loan from the banks may raise eyebrows. It will therefore be
appropriate for you as an investor to show your commitment to the property project by financing at least 20%
of the total required amount. Indeed, a cursory survey of most bank
products in Australia will
show that as much as 100% financing is available; it may nevertheless have its hidden costs as the banker
risks it all.
5. Choose Good Locations
For the purposes of risk management and perfection of security,
bankers will want to know that the property that a borrower intends to invest in will have reasonable returns
in order for it to service the loan advanced. Apart from this, it should
be possible for the bank to sell the property should the borrower default in the loan
payment. Location will therefore determine the existence or non existence of liquidity
risk.
6- Good Credit Rating
Bankers share information on the credit worthiness of borrowers.
It will be in your interest as a property investor to build a good reputation for long term relations with
banks, especially if you plan on obtaining more than one property investment loan.
7- Approach more Lenders
Never give up on your quest to get the property investemnt loan
you want. The more lenders you approach the better your chances of obtaining that property investment
loan and reaching your financial goals and dream quicker.
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