As a self-employed individual, you might think it will be tough to buy an investment home. However, the process is similar to those with full-time jobs. Check out our latest blog to learn more!
Getting A Loan
Get Your Paperwork In Order
Many self-employed individuals will do some prep work before applying for a loan. Many will choose to pay themselves a W2 wage as opposed to an owners draw. You will need to be able to show stable and consistent income, ideally with gains over time. Be prepared for a higher interest rate as someone who is self-employed. This is often considered risky by the lenders, and sometimes you will simply need to pay more. You will also need to make sure your credit is in good standing. If there are items that are easily cleared up, then, by all means, do so. If there are items you want to contest, take action by writing to the creditors as well as the credit bureaus themselves. Also, and this is a good practice to begin with, be sure to keep all of your business and personal transactions separate. Comingling funds creates confusion and will make things more difficult come tax time.
Reduce Your Deductions
While many business owners use all the deductions they are entitled to, this will end up decreasing your income. The lenders will want to see a high income in order to show you will be able to pay back the loan. When filing your taxes this year, consider taking a pass on some deductions you had to write off. This will help the lender see that you actually do have the income required to pay back the loan.
Save Up For That Downpayment
It is safe to assume you will need to put down at least 20% when you buy an investment home. Depending on the property, this could be a fairly large chunk of change. It is smart to begin saving right away and consider setting aside a set amount each month. Treat your saving account as simply another bill you need to pay. Some other great ideas would be to skip your yearly vacation and make sure any unexpected cash you receive goes straight to the savings account. If needed, consider tapping into your retirement account or your 401k, just make sure the penalties aren’t too steep.
Work With A Pro
When you work with a professional such as Luxdoor Invest you will be able to purchase a fantastic investment property at a very low price. We offer off-market deals, which will save everyone time and money. Many of our buyers pay in cash, but that is not always a requirement. We work with private buyers and sellers as well as other investors to offer some of the best deals in the Chicago area. Working with a professional will ensure you are purchasing a high-value property at a low price. We only buy and sell the best houses in the Chicago area.
How To Save
To save up to buy an investment home in cash, it is smart to begin saving early. As with saving up for a downpayment, saving up to buy a house in cash can take some work. Consider liquidating other assets and avoiding any unnecessary spending. There are many systems to help you save your cash and by following them, you will be able to put more cash in your pocket, much more quickly.