EagleTribune.com, North Andover, MA

Breaking News

Real Estate News

May 4, 2012

How to Get Financing for Rental Properties

Syndicated — These days, many people hear in the news that it's a good time to buy rental property and so they've decided that they would like to get started in the property rental business, (a.k.a. being a landlord).

But, in order to get into the rental property investment business, how do you obtain mortgage financing to purchase your first rental property? It's true that it has become a lot harder to get financing these days; but for people with decent credit and sufficient income there is still plenty of money available to borrow. For terminology purposes, when you borrow for a rental property, it is called non-owner occupant (NOO) financing. Let's run through some financing issues, items and suggestions that may help you.

Buy As an Owner Occupant (OO)

The best way to get into the landlord business is to buy a home that makes sense as a rental property, but you buy it as a personal residence, and live there for the required twelve months that an OO loan requires a borrower to do. As an owner occupant, you get the best financing terms and you may be able to put down as little as 3.5% with FHA financing. The loan stays in place with the original terms when you move out and make it a rental. It's the best way to go!

Other reasons this makes sense:

  • You move into the property and learn the property specifics, issues, kinks, etc. and have them fixed before you move out and make it a rental property.
  • You also do any renovations and upgrades you need and you are not making two housing payments, like someone would do if they bought a property and were simply rehabbing it to rent it out.
  • Lastly, you are more selective and only buy properties that you are willing to live in, and that's a smart way to go for investors; don't buy properties that you wouldn't live in.

Text Only | Photo Reprints
Latest News
Real Estate News

NDN Video
Raw: Fight Breaks Out in Ukraine Parliament Bodies of Malaysia Jet Victims Leave Ukraine Disabled Veterans Memorial Nearing Completion Last Mass Lynching in U.S. Remains Unsolved Home-sharing Programs Help Seniors Ex-NYC Mayor: US Should Allow Flights to Israel Clinton: "AIDS-Free Generation Within Our Reach" Judge Ponders Overturning Colo. Gay Marriage Ban Airlines Halt Travel to Israel Amid Violence NYPD Chief Calls for 'use of Force' Retraining VA Nominee McDonald Goes Before Congress Bush: Don't Worry, Sugarland Isn't Breaking Up US Official: Most Migrant Children to Be Removed Police Probing Brooklyn Bridge Flag Switch CDC Head Concerned About a Post-antibiotic Era Raw: First Lady Says `Drink Up' More Water Courts Conflicted Over Healthcare Law Holder Urges Bipartisanship on Immigration Raw: Truck, Train Crash Leads to Fireball US Airlines Cancel Israel Flights
Photos of the Week