85% LTV Investment Property Strategies For Beginners
Investing in properties with a loan-to-value (LTV) ratio of 85% can be a great way to increase returns while keeping capital and risk low. Learn strategies designed for beginners to get the most out of this type of investment!
Investing in properties with an 85% Loan-To-Value Ratio (LTV) can be a great way to maximize returns and minimize your risk. Whether you’re a beginner or an experienced investor, these strategies will help you optimize this type of investment for the best possible results.
Do your research.
Before investing in an 85% LTV property, it’s essential to do your research. Understand the length of the loan, the repayment schedule, and any penalties that may apply if you don’t meet them. Consider factors such as location, the current real estate market, infrastructure development in the area, potential tenant needs and even future market trends. With proper research and due diligence, you’ll be able to make more informed decisions when investing in a high LTV property.
Calculate the LTV ratio for each property.
Knowing the LTV ratio on each property you are considering is an essential part of investment strategy. To calculate this, divide the total loan amount by the property’s appraised value. This will give you the loan-to-value (LTV) ratio, which should ideally be at or below 85 per cent in order to gain any advantage from investing in an 85% LTV property. Lowering the down payment or spreading it out over time can help you achieve a favourable LTV ratio and increase your return.
Understand risk and set limits.
To stay within your risk tolerance, you must understand the different levels of risk associated with investing in 85% LTV properties. In general, these properties are less risky due to the lower loan-to-value ratio. However, they may be more susceptible to market changes or if your borrower becomes defaults. As a new investor, setting clear limits on both your overall investment and the amount of capital you are willing to commit will help you stay within your risk parameters and maximize potential returns.
Analyze the local market conditions and target properties with strong growth potential
When evaluating a potential 85% LTV investment property, it’s important to evaluate the local market conditions. Consider the growth of the area in terms of population, new businesses, and other indicators that can influence property values. Properties in high-demand areas may be able to achieve stronger returns over time due to appreciation. Also, take note of similar properties in the area to make sure you don’t overpay for yours.
Have an exit strategy before you buy, such as flipping or renovating to add value and increase returns.
Before purchasing a property at 85% LTV, consider the exit strategy. For an investor looking to maximize returns, they may want to consider flipping or renovating the property in order to add value and increase returns. Flipping involves purchasing a property, making improvements, and selling it quickly for a profit. Alternatively, renovation can involve taking on some major updates to increase the value of a property you’re holding as a long-term investment.
Rebalance Regularly for Maximum Returns on Investment.
Regular rebalancing is one of the most important strategies for any investor looking to maximize their returns on investment. By making periodic adjustments to your portfolio, you can ensure that it’s always positioned in the best way to capitalize on market opportunities and capture gains while minimizing risk. At Agena Investment Management, we have an experienced team of advisors ready to guide you through the rebalancing process and make sure you take advantage of all the potential benefits. It is all about 85% LTV Investment Property Strategies For Beginners.