Financing Investment Properties Lagos Nigeria – Free Tips For Investment Property Financing

financing investment properties lagos nigeria africa

Financing investment properties Lagos Nigeria - Investment property financing is one of the key challenges that real estate investors have to deal with whether they are experienced property investors or first time home buyers.

In fact, the problems associated with financing investment properties is exactly the same problems associated with financing personal residential real estate.

So, whether you're thinking of investment property financing or securing real estate loans for financing a personal home purchase, you will still have to deal with the familiar problem of insufficient capital sooner or later.

Consequently, financing investment properties is just as challenging as financing personal residential real estate.

However, there is a key advantage in choosing to buy investment property.

What advantage?

Well, remember that investment property is property that generates income. Therefore when buying investment property you can use the income generated by the property as a leverage for securing investment property financing.

Obviously, you're wondering, "how does this work? How do I convince my bank or a mortgage institution to provide me funds for financing investment properties using this idea?"

Well, let me explain.

Investment Property Financing - Leveraging On The Income Generated By The Property

The primary concern of commercial banks and other home loan lenders relates to the ability of the loan requester to repay the loan amount and the associated interest month on month for the life of the loan.

So, how do you address this concern and prove to the home loan lender or mortgage institution that you have the ability to pay?

Simple.

Demonstrate your ability to pay using your earnings from your paid employment (or business) coupled with the expected income from the investment property you wish to purchase.

When you satisfy the home loan lender, bank, or mortgage institution that you have the ability to repay the mortgage and associated interest and expenses, you will be given the loan required for financing investment properties in question.

Let's take an example to drive the point home.

Case Study of Financing Investment Properties With Rental Income

As I write this, there is an apartment building in Oke Ira Ogba Lagos Nigeria consisting of four units of 3 bedroom flats within a fenced compound. The selling price of this apartment building is 30 million Naira.

This apartment building can be considered an investment property because it has the potential to generate income for the buyer.

You know the good part about this apartment building?

It's vacant.

That means the potential home buyer who buys this apartment building can start generating rental income from this property almost immediately after it is purchased.

Suppose for a moment you're interested in buying this investment property and investment property financing is the challenge.

Suppose too that the expected loan repayment period is 10 years. If you take a mortgage of 30 million Naira, your yearly repayment amount on the principal will be 3 million Naira.

Now suppose the rental value per flat is 400,000 Naira per annum. The apartment building consisting of four units of 3 bedroom flat will generate annual rental income of 1.6 million Naira (that is, 400,000 x 4).

Since you will collect two years rent when tenants rent this apartments, you will receive 3.2 million Naira upfront as two years rent on the property and 320,000 Naira as agreement fee.

The total amount generated the first year will be 3.52 million Naira. This will offset 50 percent of the loan repayment amount for 2 years.

Consequently, your monthly repayment amount will be about 50 percent of the loan amount month on month.

That is cool!

In simple words . . . the amount required for financing investment property can be reduced by up to 50 percent by carefully choosing the investment property to buy.

How does this help your investment property financing efforts?

Simple.

Just present the cash flow document to your bank or mortgage institution. They will be dumb not to see the potential in your investing strategy.

Contact us if you're thinking of financing investment property and need advice or if you have secured investment property financing and looking for the right investment property to buy.

We're here to serve you.

Related Content:

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How To Sell Your House ::: Bank Owned Properties

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Manufactured Homes ::: Guide To Online Investing

Investing For Dummies ::: Google Adsense Income

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