Buying any type of investment property is a huge financial step. Most investors exhaust the majority of their savings and still rely on loans to fund their purchases. As a result, many developers are introducing different types of payment plans for real estate investors.

In this post, we’ll share the five most common types to you can choose the best ones for your needs and financial circumstances.

5 Types of Property Purchase Plans Investors Can Opt For

1. Cash

Many real estate investors have sufficient wealth and capital to purchase investment properties with cash upfront. With this payment method, they don’t have to pay interest or wait for possession. They can own properties without the burden of debt and start recovering their amount through rental income or a future sale following appreciation.

2. 20:80 Subvention Plan

Many developers offer loan programs to investors and prompt them to pay only 20% of the desired property’s value upfront. However, these plans are generally available for under-development properties and involve forming a tripartite agreement with a bank and the buyer.

Under this payment scheme, developers secure the amount on behalf of buyers and prompt buyers to pay pre-EMI interest. Buyers can pay the remaining amount without interest and slowly build equity until they get full possession.

3. Flexi Payment Plan

Flexi payment plan combines the benefits of down payment-based plans and subvention plans. It allows buyers to pay only a third of the total cost of an investment property at the time of booking and the rest within a specified period, usually 6-25 months. Many investors opt for this strategy so they don’t have to shell out a huge amount at once.

4. Deferred Payment Plan

A deferred payment plan involves paying a higher booking amount than the minimum required and paying the remaining amount after securing a loan. The purpose of this method is to provide buyers with a better exit option.

Unlike subvention plans, buyers don’t have to sign a tripartite agreement. More importantly, they can work with a bank of their choice and even pay up to 50% or more to obtain a loan a little later.

5. Systematic Investment Plan

Finally, a real estate systematic investment plan in which buyers pay a lumpsum amount upfront and the rest in monthly installments. This method is the go-to choice for investors that don’t want to take out a loan and pay interest. However, developers or owners need to ensure that buyers have the paying capacity to complete the remaining payments on time.

Wrapping Up

Ultimately, the best payment plan depends on your financial situation and circumstances. With multiple types of payment plans for real estate investors, you have more freedom than ever before. However, you still have to do your due diligence and choose the best method for your goals and needs.

For more interesting reads related to real estate investing, visit the CHRE website. You can also explore our vast options of investment properties in Rio Grande Valley.