Investing in Real Estate 3 – Rental Condo or Rental Home
This blog will discuss a type of real estate investment, rental condos or rental homes, in Superior.
What this investment is: Purchase of a residential property to be rented out to tenants, usually on a 6-12 month lease term. This is how most new landlords get started. You can hire out all of the property management functions, but in many cases you will do many of them on your own. There are smaller down payment requirements than for larger rental buildings. The purchase process and financing process is very similar to what you experienced buying the home you live in now. It's a great way for beginners to get started. Equity needed: Currently 20% - 25% Downpayment. In some cases you might be able to do it with 10% down, but expect the second mortgage to be at a higher rate. While Freddie / Fannie lenders might only let you have four loans, smaller local lenders will let you have more than that if you have strong credit. Contact me and I’ll put you in touch with the right people. Importance of credit: Very important. A 720 FICO score would help a lot. Being able to document your income and your assets will be critical. Importance of experience with contractors: Some exposure would be helpful, but you are not likely to encounter construction projects any more difficult than you have maintaining your own personal residence. Important of experience with property managers: Not important; the majority of our clients manage their own rentals when they get started. We run classes on how to do this from time to time. Go to http://www.yourcastle.org/events.cfm to see when the next session is. The next few blog articles explore related topics, such as rentals, fix and flips, and new construction. Next week, we’ll continue to explore rental condos / homes in more detail!