FINANCING INVESTMENT PURCHASES
It is possible to finance the purchase of residential rental property. Unlike several years ago however, today a buyer must have excellent credit, be able to fully document their income, demonstrate a history of rental property ownership if they wish to use the rental payments for loan qualification and you must put at least 20% down.
In addition, the property to be financed must be in excellent condition. If the property has any deferred maintenance or if it needs over $5,000 in repairs it cannot be financed using a Fannie Mae, Freddie Mac nor FHA loan program.
Perhaps the best way to finance the purchase or rental property is through the use of a Home Equity Line of Credit (HELOC) on your primary residence. Most HELOC's are priced at prime + 1 which is 4.25% right now and the minimum payment is usually interest only. With a HELOC, if you have the equity you can finance the entire purchase price making the return on cash invested much higher while saving the closing costs on doing a conforming investor loan. Whether this makes sense however really depends on the individual and their longer term plans.
Financing really has to be structured to each individual buyers needs. We do have a great deal of experience assisting buyers in obtaining financing and advising buyers on what options would work best. Please give Terry a call to discuss in detail.