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Guidelines for Investment Properties: in Getting Loan and More

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By : Vicki Hat    99 or more times read
A lot of people want to engage in the real estate business. This is because they believe they can really earn huge amounts of profits when done right. This is true. Unfortunately, people are scared to make the move nowadays because real estate is such in a rocky state.

With the current real estate condition, lenders also make it harder for investors to get financing for investment properties. In fact, standards have become higher ever since the downing of the mortgage industry. Lenders are now on a credit crunch and they are now opting to work with clients who are considered a less risky investment.

However, this year, the guidelines for investment were changed. Fannie Mae has adjusted their loan conditions for second homes and investment properties, in the hope to lift the depressing real estate market. Investors can now finance properties to a maximum of ten if they meet the required underwriting.

Other contents of the guidelines include the following:

  1. The borrower should not have a history of bankruptcy or foreclosure for the past 7 months. And he or she should also not have delinquencies in payments for the past 12 months.

  2. The credit score requirement is at 720.

  3. The loan to value ratio varies for 1 unit to 2 to 4 unit. For one unit purchase it is at 75%. For 1 unit limited cash out refinance it is 70%. And for 2 to 4 unit purchase and limited cash-out refinance it is 70%.

  4. The borrowers should have reserves. For loans secured by investment properties, Fannie Mae requires 6 months reserve. Lower reserve of 2 months is required for single unit properties.

  5. Down payment also varies. For investment properties it will be at 30 percent.

Any investor can now finance up to ten investment properties if they meet the standards established for underwriting. However, even if Fannie Mae has changed their guidelines, the approval of loans will still be dependent on how good the financial standing of the investor is. Lucky for those who are professional investors because they can greatly benefit from these changes.

More on Investment Property Guidelines

Now that you know how you can finance for your investment properties, you must then know how to select them. Before deciding to buy, always have the properties inspected. It does not matter whether you will be flipping homes, renting them out or selling them in an as is condition, inspection can still help you save thousands of dollars worth of repair.

Aside from that, always find determined sellers and make your purchase from them. Do you know why? You will most likely purchase discounted properties. As a result, you will be able to shell out lower capital and you will have more chances to maximize profits. If you can go for wholesale properties, the better because you will most likely get bigger discounts compared to their retail values.

Lastly, if you are new to this business, find quality professionals to work with you. This way you will be guided accordingly to the ins and outs of real estate investment.
Find more real estate tips in 4-Bedroom Houses for Sale in Tolleson AZ, Community Pool Real Estate in Tolleson AZ and Short Sale Houses for Sale in Tolleson AZ.

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