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Pros and Cons of Financing Your Riverside Investment Property

Before you lay out cash for your next investment property or seek out financing, there is a great deal to consider. While each investor may find one method of buying investment property more favorable than another, both have drawbacks yet benefit investors. 

Read on as we discuss the pros and cons of financing your Riverside investment property. 

Pros

Time

For beginners, financing your Riverside investment property gives you the time to build equity and get started on building your real estate portfolio sooner rather than later. In real estate, the benefits realized from taking out a mortgage if you don’t have the cash far outweigh the opportunities and years of appreciation on the investment property that would be lost waiting until you saved enough money to begin.

Leverage

You can generate better cash flow by financing your Riverside investment property. By taking on the risk of a mortgage, you benefit from higher cash-on-cash returns, cash flow as it relates to actual cash invested in a property, calculated on a pre-tax basis. 

More Assets

By using other people’s money and financing your Riverside investment property, you can purchase more properties and diversify your portfolio to build security. In addition, having several properties in different areas makes it easier to ride out a downturn in one sector. 

Return on Equity

Financing your Riverside investment property also amplifies returns as you pay down the debt and the property appreciates. 

Taxes

Another benefit of financing your Riverside investment property is the depreciation of the entire value of the house when you carry a mortgage, which can be very beneficial to your tax returns. You can also deduct the interest on the mortgage.

Depreciation

Financing your Riverside investment property adds a buffer of protection from depreciation. If the property drops in value, you have lost your cash equity.

Cons

Delays

Financing your Riverside investment property may make you come in second with sellers considering multiple offers. It’s only natural that sellers prefer cash, which is a fast track to the closing table and has no lender to satisfy to ensure the sale goes through in the fast-paced real estate market we are experiencing.

Less Cash Flow

Mortgage payments and interest eat into your cash flow when financing your Riverside investment property. While other expenses add up, your mortgage and interest on the loan will take the most significant chunk of your rental income.

Qualifying

Building up your creditworthiness and saving enough for a down, and qualifying for financing your Riverside investment property are all achievements that are much easier said than done. Although you may find the need for alternative financing options, speaking with an experienced investor like the professionals at 2nd Chance Investment Group LLC. can help guide you over any hurdles you face in attaining financing or building your credit and savings.

Credit Risk

Financing your Riverside investment property means extended problems with payments from tenants or even vacancies are a more significant problem; carrying mortgages carries a potential for foreclosure and damage to your creditworthiness.

If you’re ready to buy and considering financing your Riverside investment property, the professional investors at 2nd Chance Investment Group LLC. will answer any of your questions or concerns. Our focus is on you at 2nd Chance Investment Group LLC.; we’ll stop and take the time to listen so we can help you take the steps best suited to your unique circumstances to realize your investment goals. You can count on the full-service team at 2nd Chance Investment Group LLC., from locating the right investment property to property management and everything in between. Don’t forget to ask about our current inventory of the best investment properties available in Riverside. Contact 2nd Chance Investment Group LLC. at (866) 593 7012.

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