While purchasing a personal residence and an investment property are both considered sizable financial transactions, the way you go about funding them can differ – in some cases, significantly. So, how can you find the right lender for your rental / investment property purchases?
Certainly, one option is to check with a bank or other lender about securing a conventional loan. This will generally require you to submit a down payment of 20% or more. This type of lender will also want information regarding your personal income, as well as your credit history and credit score so they know more about your payment habits before giving you the green light.
Traditional lenders won’t usually factor in the rent payment from future tenants as a part of your debt-to-income ratio. So, you’ll likely need to have an additional amount of cash on hand that can be used to make the mortgage payment – even if the property sits empty.
As an alternative to a more traditional bank or lender, you may opt to work with a private money lender instead. In this case, the lender is typically much more interested in the property’s potential than they are in your personal credit details.
Typically, this type of lender will want to be protected by having the first deed of trust on the property, which provides them with some collateral just in case you (the borrower) default on the payments.
Once you own a rental property (or more than one), your focus can then shift from securing an income-generating investment to finding the right tenant(s), as well as keeping up with the ongoing maintenance that the property requires.
If adding these tasks to an already-full to-do list will put in crimp in your schedule, hiring a property manager could be a good solution. That way, you won’t have to worry about late night calls about a leaky toilet or cracked window.
So, if you own (or you soon plan to own) rental real estate in Orlando and/or the surrounding Central Florida area, give us a call to find out more about how an experienced local property management team can be the right move for you.