Pros and Cons of Financing Your Orange County 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 Orange County investment property. 

Pros

Time

For beginners, financing your Orange County 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 Orange County 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 Orange County 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 Orange County investment property also amplifies returns as you pay down the debt and the property appreciates. 

Taxes

Another benefit of financing your Orange County 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 Orange County 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 Orange County 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 Orange County 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 Orange County 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 H&M Realty Group can help guide you over any hurdles you face in attaining financing or building your credit and savings.

Credit Risk

Financing your Orange County 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 Orange County investment property, the professional investors at H&M Realty Group will answer any of your questions or concerns. Our focus is on you at H&M Realty Group; 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 H&M Realty Group, 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 Orange County. Contact H&M Realty Group at 949-625-4533.

Joe

Broker/Realtor/Investor/Mentor (41 years experience) Specialties: Buyer's Agent, Listing Agent, Foreclosure, Short-Sale, Property Management, Landlord I'm a Full Time Real Estate Professional, house flipper and mentor to many of my clients. I am here to help you get top dollar for your home or get you the best price for a home that you are going to live in. I have over 40 years of real estate experience for you to draw on and actively list and sell over 20 homes a year. I have sold over 600+ homes in the last ten years alone. I am a very skillful negotiator and will work diligently to help you realize the best possible price when buying or selling your home. With my Exclusive Home Acquisition & Sales System, I can find the Right Home for You! I have access to homes no other Realtor will show you. I can show you how to save an average of $10,000.00 on the purchase price. We will find a home that fits your needs, in a neighborhood that suits your style. If you are selling your home then I can bring all the professionals to you. I always include professional photos in ALL my listings. I have contractors standing by to assist with those upgrades if needed. I can also quickly get you ALL CASH offers for your home if you desire. My marketing surpasses all other agents. It begins with extensive internet advertising to hundreds of websites throughout the world. I do direct mail marketing for you home and also knock on doors in your neighborhood when I am holding an open house. I hold you home open to expose it to as many buyers as possible. My Exclusive program is designed to sell your home for Top Dollar in Any market. I am an experienced flipper here in Orange County and therefore can offer you my over 40 years of real estate experience. The information is available to you at no charge! If you like what you see, please call me and setup Your Free Consultation.

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