If you’ve ever thought about purchasing a rental property, 2014 will be a great year to do it! Rates continue to be very low and home prices are still very affordable as well. From my personal experience and conversations with folks who have rentals, here are the first 3 things to consider when purchasing a rental:
- Make sure you have the required down payment for a rental, which is a minimum of 20%. If you can come up with a 25% down payment, the rates and fees are much improved.
- Make sure that you have the necessary cash reserves, which is 6 months of payments for each mortgage you have. Retirement savings also counts towards this requirement.
- If you’ve got both of the above, it’s time to chat with your lender and get officially pre-approved! Even though you’ll be getting rent for the home, you will need to qualify using your existing income. After 2 years of reporting rental income on your taxes, THEN you can use the rental income to offset a mortgage.
There are lots of other things to consider, so feel free to contact me with any questions you might have!
I hope that you’re having a great start to your year!