question Vivian : real estate investment ..?
I have some questions on loans for investment. My husband and I are investing in land to build an apartment complex interested but not sure how the process works. We currently have a house with an FHA loan. If the mortgage will be counted as an expense when applying for an investment loan? How can we qualify for an investment loan? And are willing to invest the same as a conventional loan? We need a little guidance on how it began and what we need to plan in order to achieve this in the future. Merci.Je not trying to build a large complex. Maybe 6 units … Best Answer:
response from the son of rage and love
least 25% down payment on the property in need of money for the unlikely event that a bank would give you about raw land – without country building on it is nothing more than an expense, there is no income. Even if you just now innovations, it would probably be a year to get the building ready and filled with paying tenants. For this year, you pay: (a) the mortgage on the property, (b) property taxes on land, and (c) payments for the construction of the building
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What do you think? Answer below!
First be aware that they are going to require you to pay cash the land and then have 25% of the construction costs that you first give to the bank, you do not get it back until the last 25% of construction.
Also to qualify for a loan to build investment property you are going to have to show really great income from other investment property you have for at least 2 years. They want to know that you have some idea of how to produce positive cash flow with rental property.
At this current economy, it is more cost effective to buy an existing apartment building in a short sale scenario than to build one. If the apartment building is 4 units or less, it may be considered a residential loan. If more, it would be considered commercial.
If you invest in land, consider the fact that you still need to pay the real estate taxes even if you have no building on it yet.
Commercial loans are different than residential loans. We look at the credit score and personal financial situation, business credit score for approval.
The key in commercial loans is cash flow.
I myself have purchased a 3 unit apartment building. Even when my expenses were high, I could not increase the rent because the market was dictating how much to rent it for. If its too high, you do not get tenants, but you are stuck with the expenses.
Before investing, look into expenses and income of the area you intend to invest in.
There are SBA or government guaranteed loans available.
ok
You want to build an apartment complex? Are you sure that’s what you are asking of because that is a multimillion $ dollar project. Your going to need a Corporation and investors. No bank is going to touch a project such as that by a couple that actually has a FHA loan. You will first have to start a builder business and obtain the property for business purposes such as to build an apartment complex. Basically, no one will accept you have any idea what your doing if you don’t become an official apartment complex builder. If you even get a loan, but not a corporation, if you can’t build the complex, resell the land or pay the loan, everything you own will be taken by the bank, such including, but not limited to your home. Second, land is not considered good collateral for a banker. Land value can go up if someone wants it to build on, but go down if no one does. Due to zoning laws you might only be able to build an apartment complex. Therefore, you would have to guarantee that an apartment complex will be build. If you can’t accomplish this, then you would be applying for a conventional loan for land you want. BTW, as your other post say, it would be much easier to buy an apartment house or a Days Inn type place. This could be an investment having tenants already in it or guest. Your plan is a bit too high ended. If this land has no plumbing for example, which it shouldn’t, your going to have to buy a sewer system to the house. If your not an actual builder, this will cost you millions.