100 Percent Financing for Investment
Properties

Although they are few and far between, there are loans for 100 percent financing for investment properties.

Investing in Rental Property

The best way to find one is to ask local lenders that specialize in commercial lending. In the event you cannot obtain a loan for 100 percent financing for investment properties, then there are still avenues you can take to reduce or eliminate your out-of-pocket expenses. Here are just a few of them:

• The seller may take part of the purchase price in an I.O.U. note, to be repaid in the future.
• Get an 80% or 90% loan and use your 10% home equity line of credit.
• Find a seller willing to pay all or most of the closing costs. There are sellers desperate enough to sell that they will gladly do this and there are loan programs available which allow you to do this.
• You may have funds in a brokerage account. Secure your down payment with these funds. The lender may put a lien on the account to protect its interest. Once the investment property achieves the required equity, the lien on the account will be released.
• Borrow against the equity in your primary residence.
• If you have cash but you don't want to tie it up in the loan as a down payment, you may open a certificate of deposit with the lender and allow the lender a lien for the down payment amount. Borrow 100% of the purchase amount. Once the CD achieves the required equity, the lien will be released and the CD plus any accrued interest will be returned to you.

The U.S. government has homes that have been foreclosed on through its various agencies, such as VA and HUD. It's possible to qualify for 100% owner occupant financing or 95% investor financing through Vendee Financing. Call 800-816-4346 to speak with a representative. Visit Home Sales.Gov to see what's currently available.

It's easier to obtain 100% financing for a primary residence than for an investment property. The easiest route to achieve 100% financing is to find a real "bargain" and buy the property below market value. This will reassure the lender that when the property is resold, it will have appreciated substantially in value, so they may be more apt to lend you the full value.

Another option is to buy a multi-family unit and live in one of the units, while having the intention to rent out all the others. This makes you an owner-occupant so that you qualify for conventional mortgages and some government programs. Part of the anticipated rent may also count toward your expected income.

Consider the option of seeking out funds through private investors who may be willing to provide the full amount of financing needed in return for a promised return in the future.

1. Get your paperwork together. You will most likely need the past two year's tax returns (self-employed individuals) or the last two pay stubs for salaried workers. You'll need copies of bank statements, investment and retirement accounts, driver's license and social security card. If you've recently had a bankruptcy, divorce or separation, you'll need copies of those documents. In the case of a bankruptcy, you will need the discharge papers and at least six months should have lapsed between then and trying to get a new loan. You may need other documentation, depending upon the lender.
2. This is an investment property. How do you intend to hold title? Many people form a corporation, Limited Liability Company or Limited Partnership to protect their investment assets and to limit personal liability.
3. Look to establish ongoing relationships with an attorney, tax adviser / accountant, mortgage broker and real estate agent with commercial and investment expertise. These professionals can advise you of your rights and help you protect your investment.
4. Get a letter of pre-approval before you search for the home. This will eliminate frustration later on, and it will be a bargaining chip in your favor when you negotiate with sellers. The sellers will know you are able to follow through on your word.
5. Shop around for the best loan program or creative financing for you.
6. Try not to get analysis paralysis. This is when you have analyzed something thoroughly but you continue to analyze it until you miss a great deal. Once you have your financing in place, move to claim your investment.

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