Income property financing is probably most involved financing you’ll ever seek. The income means that making payments should be easier, making lenders more likely to finance. But the potential problems with this type of property make lenders look closely at the property deal, and at your ability to manage the property before approving income property financing.

Before you approach a lender for income property financing, take a careful look at the property. Is it likely to pay for itself? Are there repairs needed to get it running to full potential? Do you know anything about this kind of business?

One way you can convince a lender that financing income property for you is a good risk is to create a business plan. If you don’t know how to create a professional business plan, look for online sources on the topic. Your plan should include expenses and revenue in the property’s current condition, along with any changes you plan to make if you are approved for income property financing. Then put together projections for income and expenses over the next year, two years and five years. Longer projections should be made if it’s practical to do so. Presenting a business plan along with your application for income property financing will alert the lender that this isn’t a passing idea, but that you’ve already put thought and effort into the project.

An appraisal and inspection can also help you gather information that will help in your quest for income property financing. Remember that an appraisal and/or property inspection may be required before a lender grants the income property financing and you may be paying for the service twice if the lender wants to hire their own professionals. You have to decide whether it’s worth the cost, but take a look at some of the information you can gather from these services.

An appraiser who is familiar with valuing income property will not only tell you what the building and land are worth, but will give you the value of the property considering its income producing capacity. That can give you an important heads up about the asking price and what you should be willing to pay, as well as what a lender is likely to allow if the income property financing is approved.

A property inspector will also provide some important information. Mechanical and electrical systems will usually be part of an inspector’s service. You’ll know whether the air conditioning and heating units are in good working order, and probably be alerted to things such as the fact that the systems are old. Termite damage, structural issues and even code violations (important if the property is an apartment building) may be part of the inspector’s report. Armed with this information, you’ll be able to create a realistic business plan to present to a lender when you ask for income property financing.

Income property financing requires more effort than most types of financing. You may be called on to present additional information before your income property financing is approved, including records from the previous owner. Just remember the reason you’re searching for the income property financing in the first place – the potential this particular property deal is offering.