Financing a rental property is a bit different than getting a mortgage for a home you plan to live in. If you want to become a landlord, here are your two basic loan options:
Buy as an owner occupant. This is your best opportunity to get the most favorable loan terms and make the least amount of a down payment. But this type of loan limits your ability to rent out your property for a specified period of time, such as 12 months. However, if you are purchasing a property that needs a lot of work, this may give you some time to do it. Many investors buy homes this way, live in them while they are fixing them up and sell after the time commitment is satisfied. The biggest downside to this strategy, of course, is the length of time you aren’t able to rent it out.
Buy as a landlord. Depending on your circumstances, you’ll probably have to make a larger down payment of 10 to 25 percent. You’ll also be scrutinized a bit more than if you were buying a home you planned to live in. But with this type of loan, you’ll be able to buy a property that already has tenants, eliminating the need to find, screen and place renters in the property.
Want to learn more about the financing end of becoming landlord? GIve us a call. We would be glad to discuss your lending options!