While owning rental property can be a great way to supplement your income, one of the biggest barriers for many investors (and potential investors) is the actual purchase – particularly as it relates to financing the deal through a traditional bank or lender.
That’s because getting a mortgage for rental property can come with a few additional hoops to jump through as compared to obtaining financing for a personal residence. But there are some ways that you can help the lender to give you the green light.
First, before you even meet with a lender, you need to be prepared to prove that you have enough cash reserves to continue making payments on the loan – even if the property is empty. Likewise, making a large down payment can also be beneficial. In the case of investment real estate, it is typically required that a buyer put a minimum of 20% down.
It is also recommended that you have a good solid credit score. For instance, a score that is below 740 could cost you in terms of points on the loan or via a higher interest rate (which in turn can equate to a higher monthly mortgage payment).
Before you go through with the purchase of a rental property, it is also important that you have a plan in place for finding and screening tenants, as well as for keeping up with maintenance issues and any possible emergencies that may come up (such as repairing a leaky roof or broken appliances).
Owning and managing rental units can be somewhat time-consuming – particularly if you own more than one investment property. In this case, you could leverage your time by hiring a property manager. That way, you can delegate a long list of tasks that could keep you from focusing on other things.
If you own rental real estate in Orlando and / or the surrounding Central Florida area and you’d like more details on how a property manager can keep your investments running smoothly, Contact Us.