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Purchase Investment Properties using Private Money

Posted by Sean Stewart on 5 December 2023
Purchase Investment Properties using Private Money

Buying an investment property is a great way to build wealth. Your financing decision will have a major impact on your rate of return for this investment. Private money is more expensive than a traditional lender, though here are three reasons to use private money to finance your investment properties.

Private lenders do not need to qualify based on your employment income. Traditional lenders use your income to calculate a total debt service ratio which limits the amount of financing you qualify for. Further, traditional lenders use only a portion of the rental income to help qualify for the mortgage. Private lenders do not need to use your income to qualify and can use 100% of the rental income.

Buy properties that have a rate or return greater than the cost of borrowing. Even if the cost of private money is expensive, as long as you have a positive cashflow, after financing cost, then it is still a good investment. Don’t limit yourself just because you think the cost of borrowing is high. Focus on buying positive cashflow.

Private lenders do not have a limit on the number of properties you can own. Most traditional lenders have a maximum number of properties. Banks tend to limit it to 4 investment properties. Private money allows you to grow your portfolio beyond traditional limits.

Use private financing to your advantage and build your real estate portfolio.

Contact Us

For more information on investing with private money, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com
Author:Sean Stewart
About: Mortgage Broker
Tags:Key Tips

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