With interest rates still at or near record lows and money for properties beginning to flow a lot easier than in recent memory, there might be an opportunity for investors to begin building their portfolios of investment properties. Now the question is, how are you going to get a mortgage since this is an Investment Property Mortgage With Rental Income. These properties wouldn’t be owner-occupied which means that the owner of the property or person on the mortgage actually lives in the building as well. These would be stand-alone, 100% rented units or classified as non-owner occupied. So in order to get Investment Property Mortgage With Rental Income there are some avenues you are going to have to take, but it can definitely be done in today’s market.
When you are looking for an Investment Property Mortgage With Rental Income you will have to obtain what is called non-owner occupied financing and unlike standard loans where you live in the home that is used as collateral, these loans for investment properties normally have higher interest rates. The premium put on these loans is at least .25% – .50% higher than standard loans. Now when looking to see if you are able to afford financing for the investment property, there is normally an analysis of the rental property, rental rates, and % occupancy of the building from a historical standpoint. After determining a baseline for rental income, the lender will now begin to chip away at this income by calculating depreciation, HOA, mortgage, insurance, and interest. The final number here goes a long way in determining your ability to borrow against the property. You can actually sabotage yourself with regards to getting a loan if you are claiming huge losses and expenses on your Schedule E for supplemental rental income. If you are claiming losses, the lender will use this information to take it against your income on the property. This is treated just the same as If you claim business expenses on your personal return under Form 2106.
With regards to general terms within the industry regarding rental income, here is how you can determine the amount of income that will be allowed.
– You will be able to use up to 75% of the projected fair market value of the rents for the property as per the appraisal report stating such.
– If by chance you have owned the rental property for over a year and are obtaining a new loan, the lender can take the average of your expenses to determine a baseline for expenses.
– If you purchased the property less than a year ago, you are able to use 75% of the projected fair market rents which are stated on rental agreements for the properties.
As you can see, there are definite means by which you can obtaining financing for a non-owner occupied investment property and obtain an Investment Property Mortgage With Rental Income. Also remember that having a solid credit score and a minimum of 3-6 months in reserves for the property can go a long way in getting you approved. Given these factors, you should be confident in going to a lender and getting financing accordingly. If you need assistance, you need to call me ASAP for assistance at 888-900-1020 or visit my website and inquire at www.loanconsultants.org.