elcome to the second this series, LTV (loan-to-value)
segment of a three-part ratio indicates the percentage of
series about income money your lender will lend you
property. In this second segment to the property's market value.
we will be discussing financing An 80% LTV is the maximum most
options for residential income lenders will provide for
properties as well as the upside residential income property.
(and downside) of owning this
type of property. Loan terms usually range from 25
to 30 years with a maximum loan
Financial Concerns amount of up to $3 million.
Current competitive interest
Financing options for residential rates can range from 4.70% up to
income property vary widely from 6.625% depending on several
commercial or industrial factors including your credit
properties. For one thing, most rating and the size of your down
private lenders place size payment.
requirements on the apartment
complexes they are willing to Most loans for residential income
finance, usually five units or property are termed as
more. Smaller complexes just ‘recourse loans'. This means
don't have the revenue generation that the lender has ‘recourse'
potential required to make your to your personal assets in the
loan officer feel comfortable. event you default on the loan.
Needless to say, you need to make
The good news is that residential sure you are ready to assume the
income property loans usually financial responsibility of
carry a higher LTV ratio than making your payments in a timely
other property types. If you fashion.
recall from the first segment of
Managerial Challenges or malfunction. If you have the
ability to replace windows or
Besides financial responsibility, wiring, know how to fix an A/C or
residential income property refrigerator, or have rudimentary
management brings with it other plumbing skills, chances are you
unique challenges. Likewise, it will save some money by
demands certain skills above and performing these tasks yourself.
beyond investment savvy and
experience. To successfully Sometimes dealing with tenants
manage your residential income can be the hardest part of owning
property, you'll need a good residential income property. How
combination of street smarts, well can you deal with angry,
interpersonal, and handyman demanding people? Do you stay
skills. cool, calm, and collected in
tense interpersonal situations?
More than any other income If so, you'll be prepared to deal
property type, residential with some of the issues likely to
property will bring you into crop up during your management
close contact with those renting experience.
or leasing your property.
Possibly the most important part Conclusion
is screening those you rent to.
Background checks, calls to It's important to keep your goals
previous landlords, and searching in sight when managing a
interviews can save you a lot of residential income property.
headache and money down the road. Sometimes it's easy to get bogged
down in the day-to-day duties of
running the property that you
It's likely that at some point in lose sight of making a profit.
the tenancy something will break Know your rights as a landlord;
know your bottom line as an amount of effort and money you
investor. As with any should put into your income
investment, having an accurate property.
idea of your time horizon will,
to a large extent, dictate the
About the Author:
Cameron Brown is an internet marketer specializing in investment property, see http://www.sncloans.com/investment-property.html. For more information on residential income property, please visit http://www.sncloans.com/income-property.html
Source: www.isnare.com
