Investment properties or non-owner occupied properties can be a great source of additional income for casual homeowners and real estate investors. Extensive research, proper timing, and adequate planning increase the potential for an investment property to result in a valuable profit.
Additional Monthly Income – By purchasing an investment property in a desirable area, close to local businesses, in a commuter friendly neighborhood, or near a popular vacation destination, buyers can attract renters resulting in additional income helping to offset first mortgages and other monthly expenses.
Increased Equity– By owning an additional property, benefits increase even more when property values rise.
Tax benefits – Mortgage and home equity interest payments and property taxes may be an opportunity to capitalize on tax advantages.1
How is Purchasing an Investment Property Different?
Down Payment – There is limited access to mortgage insurance covering investment properties, so having 20% down in most cases will be necessary, 25% or more may result in an even better interest rate. While it is ideal to have this money come from savings, sometimes there are options to tap into existing home equity.
Credit – Lenders look for exceptional credit history from repeat buyers. According to Bankrate.com, having a minimum score of 740 is generally what is needed to qualify for an investment property loan, to avoid paying a high interest rate. For those just shy of that mark, Axia offers a Credit Optimizer program, FREE to clients for the first 6 months!
Before a final decision is made on an investment property, thoroughly investigate and research the area. Knowing whether the location is deemed desirable and how the current market is trending should carry significant weight in the decision-making process. If the buyer is not willing to live in the space, it may not be a wise investment, which is why it is important to visit the property first.
Make sure that this commitment is maintainable and not creating a financial strain or headache. These investments do require money upfront, but in the end could have significant financial advantages. Axia has industry leading tools and resources to help prepare you for this journey. Check out the Axia App to create a monthly payment scenario to help determine if buying an investment property is a feasible option.
Call your local Axia Loan Originator to discuss details!
1 Please consult a tax professional for further details