|
BUYING
MOUNTAIN REAL ESTATE, especially when it's
out-of-state, can have a few challenges.
Chances
are that the bank where you have your checking or savings
account will not loan you the money if the real estate
is out-of-State. However, always check there first
because some lenders WILL, especially if they have
a branch in the vicinity of the property you want to
purchase.
The
most likely source of a loan will be in the State where
the real estate is located. We recommend that you do
3 things while in the area of the property you plan
to purchase: 1) Pick up a local newspaper because there
are always ads from money lenders in the paper; 2)
visit a bank, and 3) visit a non-bank lender such as
Wells Fargo.
Because
of the many options available from different lenders,
we strongly recommend that you check with at least
3 different lenders. |
TRADITIONAL
MORTGAGES
This
finance method allows you to pay off the loan amount
over a fixed number of months. It is a good option
when purchasing a property with a house on it. However,
many lenders will not issue a traditional mortgage
for the purchase of vacant land.
INTEREST-ONLY
LOANS
Investors
often use this type of loan because it allows them
to put only a minimal amount of cash down. Since
your monthly payments are interest only, they are
very affordable.
What's
exciting is that even though the principal is not
reduced, the property value goes up (if it was a
good investment) and you acquire equity.
This
method is worthy of consideration on the purchase
of vacant land to be held for a short period of time
while the value appreciates. After that period of
time you either sell it for a profit, or build a
house and use the equity value to offset the downpayment. |
CREATIVE
FINANCING
Home
Equity Loans
This method is quite easy. If your primary home has increased in
value, you simply borrow from that equity value to purchase your
mountain property.
Self
Directed IRA
If you already have an IRA, you can convert it to a Self-Directed
IRA and use it to purchase real estate for investment purposes.
There are strict IRS rules that must be followed to use this option.
Look in the Yellow Pages under investment services for someone
who specializes in Self-Directed IRA administration.
1031
Exchange
The IRS allows you to take the profits from the sale of real estate
and reinvest it in similar real estate without paying the capital
gains tax. Like the Self-Directed IRA, there are very strict rules
about how this is done. You must contact a tax accountant or someone
who specializes in this type of transaction.
Family
Maybe you never thought about it but often another member of your
family may have an interest in investing in a beautiful mountain
property. A 50-50 split on everything is appealing to many
people. |
