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: