A significant portion of my business is helping investors purchase rental properties.
Whether you are buying your first rental, buying a primary residence with plans to move in a few years and convert it to a rental, or buy a multi-family property, I know how to guide you through the steps to make the process as easy as possible.
Frankly, the guidelines for investment properties change frequently. I constantly stay abreast of these changes so I can help you in the best possible way.
When you purchase a single family home, the minimum down payment required is 15%. With 15% down, you will have mortgage insurance and you will not get the lowest rate. Frankly, I have several investors who prefer this option because their cash outlay is minimal.
If you put 20% down, no mortgage insurance is required, and the interest rate will be better than if you put 15% down.
Ideally, if you can put 25% down, you will get the best interest rates available. If you want to purchase a duplex, triplex or four-plex, 25% down is definitely a requirement.
Here are some other relevant factors when you are purchasing rental properties:
- You should already own your primary residence. If you are renting an apartment and decide to buy rental homes, that is a red flag to an underwriter.
- Cash reserves are important. When you purchase a rental property, it is imperative you have the ability to maintain the mortgage payment even if the property is vacant for a few months.
- Your credit score is a key factor in your qualifying. At this time, the minimum credit score requirement is 700.
- We look at cash flow, and so should you. You should buy a rental property that will immediately have a positive cash flow, which means the rent from your tenant will be at least 26% more than your monthly debt. Our guidelines use 25% of the gross rent towards vacancies and maintenance, which is actually very fair. You should also allow for vacancies and maintenance on each property you own.
So, did I scare you off, or encourage you to become an investor? Either way, I am here to answer all of your questions and help you in every way possible! ~~ Jill ~~