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Navigating Real Estate Financing: Options and Considerations in Virginia Beach

Navigating Real Estate Financing: Options and Considerations in Virginia Beach

If you've been tracking real estate trends here in Virginia Beach, you know that inventory is going up but interest rates remain on the higher side. It's not a bad time to invest in rental properties, but your dollar may not stretch quite as far in 2024.

Under these conditions, investors need to pay close attention to the different real estate financing options available to them. This includes:

  • Traditional mortgages
  • Hard money loans
  • VA loans for veterans
  • REITs

Ready for the real estate financing tips you need to build your Virginia Beach real estate portfolio? Read on to learn more.

Traditional Mortgages

One of the most common ways that investors finance real estate purchases is with a traditional mortgage. This involves paying a downpayment (typically between 3 and 20% of the property's value) while a lender covers the rest of your upfront costs. You will then make monthly payments to repay that loan plus interest.

Get pre-qualified for a mortgage to give yourself a competitive edge as a buyer. Pre-qualification verifies your buying power and speeds up the closing process so you can start earning rental income faster.

Hard Money Loans

Some investors aren't well-positioned to qualify for a traditional mortgage. For example, you may have mediocre credit or an existing mortgage on your own home.

One alternative is a hard money loan, although we encourage you to consider your home-buying options carefully before taking out a hard money loan. While they come with fast approval and less stringent credit requirements, they also tend to have much higher interest rates and shorter repayment terms.

VA Loans for Veterans

Virginia Beach is home to thousands of veterans and we've worked with many clients who have financed their rental properties with Veterans United VA loans. VA loans come with many benefits, including:

  • No downpayment requirements
  • Relaxed credit requirements
  • Lower interest rates than traditional mortgages
  • Flexible use (e.g., loans for condominiums)

However, it's important to note that you can't use a VA loan to buy a property you're immediately going to rent out. You will need to live in the property for a minimum of one year before listing it for rent.

Group Real Estate Financing

What if you're interested in profiting off of real estate but don't want the hassle of full ownership or rental management? You may want to consider investing in a real estate investment trust (REIT) instead of seeking traditional real estate financing.

According to Nareit, the number of REIT residential properties has increased by 35% since 2018. This allows more people to profit off of rental property investments with less money down and less responsibility.

Maintain Your Portfolio With Virginia Beach Property Management

Now is a great time to invest in Virginia Beach rental properties, but real estate financing isn't as accessible as it was a few years ago. Use this guide to determine which avenue is best for you given your current financial state.

Looking for someone to maintain your portfolio as you grow it? PMI Virginia offers customizable property management services, making it easy to fill in the gaps or earn passive income with full property management. Contact us today to start building your service package.

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