Tips for Investment Propert Owner

kevin · 03-31-2006, 12:27 PM

With the real estate market taking a dip, many investment property owners are looking to take advantage of the future boom. Having many potential and current property owners inquire into 100% financing, here are a couple of guidelines that may be helpful:

-If you currently own a home, and are looking to buy an investment property, first make sure it can be qualified as a second home. As a second home, it generally has to be located around a resort type of area, river, lake, or generally rule of thumb, located in another state. If the property is within 5-10 miles of the owner occupied home, lenders will not classify it as a second home. The importance of getting a home to classify as a second home, is merely a lower interest rate will apply, generally 1.5% lower.

-For 100% financing on a N/O/O(Non-owner occupied), lender are typically looking for FICO score of 660-680, with full documentation of the income: 2 Years of tax returns or W2's. 12 months Bk statements will not be accepted. FICO scores of 700+ are necessary for a stated income loan, where as long as you are employed, you can state your income high enough to qualify within reason.
-The most important item regardless of full/stated income, is verifiable assets. Any lender will want to see assets such as savings/checking account, 401 K, stocks or bonds, etc.
-Rental Income- Always make sure to have a rental agreement ready because 75% of the rental income is taken into factor to help lower your DTI. Even if the renters haven't moved in, make sure you do get a rental agreement because it may help if your income is a bit low to qualify you.
-20% Downpayment- Where most investment property owners will take advantage of 100% financing, a smart move to avoid capital gains is to roll over the money and re-invest into the property. By putting down 20%, it helps keep the payment down by eliminating the high interest second mortgage that is involved in 100% financing.
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CafeMonkey · 04-12-2006, 07:16 AM

Quote:

For 100% financing on a N/O/O(Non-owner occupied), lender are typically looking for FICO score of 660-680

You won't do 100% if you are 750+?

kevin · 04-12-2006, 08:48 AM

That's the minimum FICO score lenders are looking for 660-680 for an investment property purchase 100%. If you have a 750+, obviously that puts you in a better situation, lower rate.

jatowi · 05-21-2006, 07:18 PM

My credit score has always been in that range however I've never run into a lender who will lend 100% on a Investment Property..Is there a way around this

kevin · 05-22-2006, 09:45 AM

Well there's only a hand full of lenders that will lend 100% Investment Property. If you need to find one, feel free to shoot me an email and I'll see what I can do.

legalhomeforms · 05-23-2006, 06:23 AM

Can you get 100% financing on a rental property. We are looking at a house across the street it is currently being rented, the owner said she is a great tenant. We were actually looking to buy and flip the property but we are thinking of letting the tenant stay and flipping in a few months to a year.

Is it easier to get 100% financing on a rental property, or a property you plan on flipping, or does it matter?

kevin · 05-23-2006, 09:09 AM

Its going to be the same either way because its still considered an investment property, depending if you already own a home or not. When you talk about flipping it, you need to be aware that some states have prepayment penalties, which can eat into your profit by flipping. So again, a rental property and investment property are basically the same concept and the same rules apply.