As a self-employed individual, you might think it will be tough to buy an investment home. However, the process is similar to those with full-time jobs. Check out our latest blog to learn more!
Getting A Loan
Get Your Paperwork In Order
Many independent workers undertake preparatory steps before applying for a loan. Some opt to receive a W-2 wage rather than owner’s draws. Demonstrating stable and consistent income, preferably with progressive gains, is essential. Expect a potentially higher interest rate due to the perceived riskiness of self-employment by lenders. Occasionally, you may need to accept paying more. Maintaining a good credit standing is crucial. Address any easily rectifiable issues promptly. If there are disputes, take proactive measures by corresponding with both creditors and credit bureaus. Additionally, it’s wise to keep business and personal transactions separate from the outset. Mixing funds can lead to confusion and complicate tax matters down the line.
Reduce Your Deductions
There’s a balancing act to consider when it comes to business deductions and loan applications. While maximizing deductions can be tempting, it’s important to remember that lenders heavily rely on your taxable income to assess your ability to repay a loan. A lower taxable income, even if it’s a result of legitimate deductions, might raise red flags for lenders and make it harder to secure financing.
So, when tax season rolls around, it might be wise to strategically forgo some deductions, particularly if you anticipate needing a loan in the near future. This can involve reviewing your deductions and prioritizing those that offer the most tax benefit without significantly impacting your taxable income. By presenting a higher taxable income picture, you can strengthen your loan application and increase your chances of approval.
Save Up For That Downpayment
It’s advisable to anticipate putting down a minimum of 20% when purchasing an investment property. This requirement can represent a significant sum, depending on the property involved. Initiating savings promptly and allocating a fixed amount each month is a prudent approach. Treat your savings account as an obligatory expense akin to any other bill. Consider forgoing your annual vacation and directing any windfalls straight into your savings. If necessary, contemplate utilizing your retirement account or 401(k), but be mindful of potential penalties.
Buying Directly
Work With A Pro
By partnering with a company like Core Real Estate Properties, you gain access to exclusive opportunities in the Cagayan de Oro property market. We specialize in off-market deals, which are properties not publicly listed. These can be fantastic finds, priced competitively and potentially below market value. This translates to significant savings for you, saving both time and money on your investment.
Our network extends beyond traditional real estate listings. We work closely with private sellers and buyers, as well as other investors, to uncover these hidden gems. This collaborative approach allows us to curate a selection of the best deals Cagayan de Oro has to offer. When you choose Core Real Estate Properties, you can be confident you’re getting more than just a property – you’re getting expert guidance and access to a network that unlocks the true potential of your investment.
How To Save
Starting to save early to purchase an investment property outright is a wise strategy. Similar to saving for a down payment, accumulating enough cash to buy a house outright requires dedication. Evaluate the possibility of liquidating other assets and minimize discretionary spending. Implementing effective saving systems can expedite the process and bolster your cash reserves significantly.