California Real Estate Investors: Four Tips to Secure Financing

An improving economy and low prices have inspired investors to dive back into the real estate market here in California. But financing is no longer quick and easy: there is a tighter credit market that can make it difficult to secure financing for investment property.

As a prospective investor, securing financing is essential for your operation. Here are four tips which may increase your chance of success.

  1. Provide a good-sized down payment. To obtain regular financing for an investment property, you will likely need to put down at least 20 percent, because mortgage insurance doesn’t cover these properties. A larger down payment will often result in a lower interest rate as well.
  2. Improve your credit score. Investors should check their score before applying for a loan, as the result will have the biggest impact on the loan’s terms. If your score is below bank standards, you will either pay a higher interest rate or pay a fee to keep the interest rate favorable. While improving your score isn’t something that you can do overnight, it is worth working towards.
  3. Use smaller banks. If you can’t offer a sizable down payment, try applying at a smaller local bank for financing. They tend to be more flexible than the larger institutions and may even look favorably on applicants seeking to invest locally.
  4. Ask for owner financing. Although this type of request used to make sellers
    uneasy during the days when getting a bank loan was easier, the credit crunch has made it more common. To motivate a seller to accept your proposal, put a game plan together and sell the owner on it. Give them reason to believe that you can and will honor your obligation.

As a real estate investor, access to financing will often make or break your investment strategy. Hopefully you’ll find these tips helpful – and don’t hesitate to reach out to me with any further questions about your real estate investment venture!


Integrated General Counsel