Buy to Rent Mortgage Tips
by Ellise Walsh

Purchasing a property to rent is a great way to build your asset base while providing an excellent income for yourself and your family. Throughout the decades, real estate has been one of the most dependable investments available anywhere, and that trend seems likely to continue. Buying to rent allows the investor to participate in the income generated by the property while enjoying the capital appreciation that generally comes with residential and commercial properties.

When choosing a rental property to buy, it is important to look around for the best deal. Be sure to verify all details provided by the seller. The primary consideration, of course is the rental income the property will generate. It is a good idea to talk to the tenants and find out if they are happy with the property. The current tenants are often the potential buyer’s best source of information when it comes to problems with the property. They will know better than anyone what repairs are needed.

It is also important to check out the current vacancy rate. If possible, the potential buyer should compare the current vacancy rate to the vacancy rate over the past several years. A rising vacancy rate could signal problems with the property. A high vacancy rate could also mean that the rent charged for the property is too high. If this is the case, of course, it could negatively impact the return you receive on the property. If the rent needs to be lowered in order to lower the vacancy rate, the return on your investment will fall. It is vital to understand the return on investment of any buy to rent property you consider.

When seeking a buy-to-rent mortgage, it is a good idea to keep your current debt as low as possible. The lower your outstanding debt, the better your mortgage application will look to lenders. If you are planning another major purchase such as an automobile, it would probably be better to put it off until the loan closes on the buy to rent mortgage.

The personal credit history and credit score of the potential buyer will also affect the success or failure of the buy to rent mortgage. Any negative items on a buyer’s personal credit history may cause the buyer to be turned down for a mortgage loan. A good credit history and high credit score will allow the potential buyer to receive the very best interest rate and terms.

It is also important to provide as much documentation as possible when seeking a rental property mortgage. The better you are able to document important information like the monthly rent roll, the appraised value of the property and the repairs that may be necessary, the better your chances of getting the rental property mortgage you need at terms you can live with and profit from.

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