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