Financing a property investment without equity

Anyone looking to invest in property without equity will need to find a financing partner to provide full financing. There are a few things to bear in mind.

Not every bank offers full financing. And if they do, not everyone who wants to buy property will succeed in getting a loan. In addition, banks distinguish between investors who buy property as a capital investment and private property buyers who want to use the property themselves. Investors have clear lending advantages compared to prospective buyers who want to finance a home without their own money.

Less is more

Those looking to make their first property investment often start out thinking that more equity is better than too little. But in real estate investing, the exact opposite is true. This is because it is better to invest a lower amount of equity capital in a property in order to keep as much capital as possible freely at your disposal.

After all, property investments are all about the return on the capital invested. In other words, how high the return on the investment will be. Anyone who raises a large amount of equity will usually have to wait a long time before the amount is recouped through rental income.

Get quotes and plan your investmen

If you are looking for a financing partner for full financing, you should obtain several quotes before deciding. It is better to get personal advice from banks and/or mortgage lenders who offer full financing. You can find mortgage lender sites online that compare multiple lenders, however. Hüttig & Rompf, for example. You will often be able to better negotiate good terms if you are transparent about offers from other potential financing partners during the consultation.

If you want to increase your chances of getting full financing for the property investment you are planning, you should be in a position to present a well thought-out and detailed investment strategy. This provides the bank with a greater sense of security. This is because investors use it to demonstrate that the property will generate returns.

Know your finances and cash flow

If you want to invest in or buy property without equity, you need to keep a close eye on your finances and monthly cash flow. After all, the monthly repayment rate for a loan without equity will be much higher than for a loan with equity.

For the property investment to be profitable for investors, the income must be higher than the repayment costs. Those whose outgoings regularly exceed their income or who often agree to pay for new purchases in instalments, for example, are more likely not to receive a financing commitment. This is because banks avoid risks.

Investors and private property buyers need to keep a close eye on their financial situation. Unlike investors, full financing is often only worthwhile for private property buyers if the extremely high instalment payments do not put too great a strain on their income.

Are you looking for a suitable financing partner? Perhaps you are interested in property investment without equity? Get in touch. We’d be happy to advise you.

WFor more information:

https://de.wikipedia.org/wiki/Immobilieninvestment

https://www.zinsland.de/blog/immobilien-investment/immobilien-ohne-eigenkapital/

https://de.wikipedia.org/wiki/Vollfinanzierung

Note

In this text, the generic masculine is used for better readability. Feminine and other gender identities are explicitly included to the extent necessary for the statement.

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.