- Benefits of Buying Investment Property – Owning investment property may provide financial and personal benefits, including:
- Rental opportunity. If you purchase an investment property close to local businesses, a popular commuting area, or vacation spot, this may be attractive to tenants and could create cash flow.
- Ongoing income and cash flow. Your investment property may provide ongoing income to offset your expenses.
- Potential tax benefits. Mortgage and home equity interest payments and property taxes may present the opportunity for tax advantages. Consult your tax advisor.
- Things To Consider – Whether you purchase a single family home, townhome, condominium, or a multi-family dwelling, when buying an investment property, here are some items to consider. Our experienced home mortgage consultants can provide more information.
Additional financial responsibilities
Investment property loans typically have higher interest rates, require larger down payments, and
have different approval requirements than properties occupied by their owners.
- You may have other expenses in addition to your monthly mortgage payments on the property, such as homeowners association dues, cleaning services, flood insurance, and utilities.
- Carefully consider your monthly cash flow to ensure you’re able to manage the additional expenses and potential tenant vacancies.
- You will have to calculate how much is needed for closing costs, repairs and ongoing expenses such as maintenance and utilities.
Different loan requirements
- You will need to have funds to cover the down payment and closing costs to purchase your investment property.
- Typically, loans require a minimum 20% down payment, as mortgage insurance is not available on investment properties.
- If you plan on using this property’s rental income to qualify for the loan, you must document property management experience for at least two years.
Mortgage or home equity financing may not be available for certain property types, such as time
shares, coops, boarding homes, some manufactured homes, or bed and breakfasts.
How Much Can I Borrow? – (see above)
Loan Qualifying Documents Needed – (see above)