You may have heard many of your friends venturing into the rental property market, some swayed by the real estate appreciation that we’ve seen over the last few years. Others want to add real estate to their investment mix to better diversify their investment portfolios.
Condos and Multi-Units
The Real Estate Market in our Urban Areas still has a need for an increase of 25% more units to be built and used as rental apartments. Additional investment is occurring in multi-unit residential properties such as duplexes, triplexes, and fourplexes, as well as single-family detached housing. Investors are looking to have the rent from these investments at least cover their costs and, over the long term, gain a reasonable return on their investment.
Consider Your Mortgage and Financing Needs Carefully
Investors who consider adding real estate assets are often confused about their mortgage financing options. The financing requirements may include having a relatively high net worth and demonstrating that you can carry the mortgage payments in addition to your other debts without factoring in all of the rental income you will receive. This certainly doesn’t leave room for many Investors who want an investment property.
Another option if you have a good amount of equity in your principal residence is to take some of that equity out, typically through a line of credit, to get a big enough down payment that then may qualify you for a regular first mortgage.
Financing Made Easy
To simplify the process, you can also now consider those lenders who have mortgage products specifically designed for small investors who own or are purchasing a residential investment property. Underwriting requirements vary and are always subject to change. Consider that most lenders for Investment Properties want to finance around 65% LTV up to 85% LTV inclusive of applicable fees.
These loans are available for single family units or up to a fourplex located in major urban centers. Properties on well and septic systems located in a town or subdivision can also qualify. Typically, 75% LTV is available for condominium units and all properties must generate a positive cash flow.
Maybe now more Investors can heed the wisdom offered by many financial professionals and diversify, diversify, and diversify by including real estate in their investment portfolios. Many strategies of acquiring and financing Investment Real Estate are Discussed in our Online Course Materials. Let me know if you would like to learn more.
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