FINANCING NEEDS

CHICAGO INVESTMENT PROPERTY MORTGAGE LOANS - REAL ESTATE FINANCE AND VALUATION

Chicago real estate investors must understand that mortgage loan finance for investment properties is a delicate issue.  Investors need to be weary of HOW to purchase a property for investment just as much as WHAT to buy based on a true valuation of the parcel itself.  There are many advantages of owning real estate as an investment such as 1031 exchanges / favorable taxation, additional cash flow without physically being involved, investment diversification and a great hedge against inflation.  A true business plan should be developed in advance of buying investment property as there are many opportunities to be seized.  The speculative buyer looking for a flip or appreciation to provide profit is playing a risky game.

CHICAGO MORTGAGE LENDING FOR REAL ESTATE INVESTORS

Each opportunity has a completely different "how to" as much as "what to" regarding a purchase or refinance.  Speculation buys are not approached the same as rehabilitation or even retained rental buys for cash flows.  Capitalization Ratios, IRR calculations, gross rent multiplier, DSCR and the effect of leverage and after-tax projections should be taken into careful consideration.

Title vesting, seasoning requirements, lease holding and personal liquidity are some of the major hurdles involved with the mortgage financing of investment property.  Identifying from where and how the funds should come is complex.  A WACC calculation may be needed.  Terms of mortgage loans for investment purposes are generally .5% to 1.5% higher than conventional financing.  The higher risk assessment is the case for more expensive funding.

Appropriate equity strategy through Mortgage Planning will more safely achieve the desired outcome.  "Buying Blindly" when financing investment properties is what we will help you avoid.  Allow us to give you an overview of the various mortgage and debt management strategies that help clients better evaluate the real estate investment plan, manage cash flow, and safely shelter you utilizing the RIGHT principles...Safety, Liquidity and ROI.  Consider the following:

  • Have a system in place to collect rents and manage the units
  • Understand real estate investment terminology
  • Utilize the 7 Keys to Profitable Investment
  • Value of Your Time
  • Sales Expenses & Real Estate Commissions
  • Cost to Carry
  • Exit Strategy / Business Plan
  • Seasoning for cash-out purposes
CALL
JON MILLER
DIRECTLY AT:
312.738.6013 jmiller@chicagobancorp.com