Whether you want to buy a home that doubles as an investment property where you live in one unit and rent out the others to reduce your mortgage payment or you want to strictly buy a property for investment property to earn income from it, these tips are for you. Many are realizing the benefits of buying and holding investment properties for their rental income potential. The tips in this article will help you make sure your investment is a sound purchase that provides you with income for years to come.
1. Get Pre-Approved Or Have Your Cash Ready Prior To Buying An Investment PropertyBuying a multi-family with four or fewer units allows buyers to use conventional mortgage financing, whereas investors wanting to buy buildings with more than four rental units will require the use of commercial financing. Commercial financing usually comes with more restrictions and less favorable terms compared to conventional financing. With conventional financing borrowers can get 30 year fixed loans and only need to put at most 25% down for a non-owner occupied property. With commercial financing borrowers will be required to put 30% or more down and may have loans with a 20 year or shorter term. Additionally commercial loans will have higher credit requirements, may be stricter with the requirement of showing actual investment management experience and/or offer variable rate loans only. If a buyer is wanting to buy a multi-family home and live in one of the units then the requirements can be even lower than a non-owner occupied mortgage. Investors who intend to occupy the building they buy can only use conventional mortgage financing for buildings with four or fewer units, with five or more units then the buyer will need to use commercial lending programs. Owner occupied investment properties can be purchased with lower down payments (such as 3.5%, 5% etc.), lower credit rating, lower reserve requirements and more. Be forewarned though, buyers should not be stating they will occupy a property as their primary residence in order to get better loan terms. Buying a building as owner occupied with never intending to occupy the home could be considered fraud which would allow the bank to ask for all the money back if they learn of the true facts. Many conventional mortgage programs require the owner occupied investment property to be occupied for at least one year by the purchaser.As with anything it pays to shop around and compare rates, requirements and terms for any loan prior to making the final commitment. Hence getting financing lined up before any property is seen is the best bet as the time required to get a loan for buying an investment property can be a little longer especially if it is non-owner occupied or requires the use of a commercial loan. With conventional mortgage financing pre-approvals can be obtained pretty easily. With commercial loans there is no true pre-approval process and instead the lender looks at the property as a good investment to lend towards as well as the credit rating of the borrower.
Five Smart Tips For Buying An Investment Property
Author:Monica Tobon Phone: 954-254-1515 Dated: July 11th 2017 Views: 4 About Monica: ...
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