{"id":24712,"date":"2021-04-29T09:49:44","date_gmt":"2021-04-29T09:49:44","guid":{"rendered":"https:\/\/www.thehouseshop.com\/property-blog\/?p=24712"},"modified":"2021-04-29T10:02:54","modified_gmt":"2021-04-29T10:02:54","slug":"how-landlords-can-finance-their-rental-properties","status":"publish","type":"post","link":"https:\/\/www.thehouseshop.com\/property-blog\/how-landlords-can-finance-their-rental-properties\/","title":{"rendered":"How Landlords Can Finance Their Rental Properties"},"content":{"rendered":"\n<!-- SEO Ultimate Plus (https:\/\/seoultimateplus.com) - Code Inserter module -->\n<script async>(function(s,u,m,o,j,v){j=u.createElement(m);v=u.getElementsByTagName(m)[0];j.async=1;j.src=o;j.dataset.sumoSiteId='b68b392479b5981b8acf46565e9fe32a0734fc21a1f7c1e60121eaa6ca1a1c64';v.parentNode.insertBefore(j,v)})(window,document,'script','\/\/load.sumo.com\/');<\/script>\n<!-- \/SEO Ultimate Plus -->\n\n<p><span style=\"font-weight: 400;\">Have you ever envisioned yourself as a landlord or property manager? If so, right now might be the perfect time to start. Today, there are more renters now than homeowners, and the demand for apartments and <a href=\"https:\/\/www.thehouseshop.com\/property-to-rent\" title=\"rental properties\">rental properties<\/a> continues to rise.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Now is a prime time to get into the property rental business, but before you start searching for your first property to rent out, it\u2019s important to consider the responsibilities that go with being a landlord \u2014 the financial responsibilities, in particular.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a landlord, it\u2019s your responsibility to fix any problems or issues and make necessary changes when those problems arise. Luckily, there are plenty of options online, so when you need to upgrade a feature, such as <\/span><a href=\"https:\/\/www.factorydirectblinds.com\/window-blinds-shades\/budget-friendly.html\"><span style=\"font-weight: 400;\">affordable shades<\/span><\/a>,<span style=\"font-weight: 400;\"> for example, you won\u2019t have to pay an arm and a leg to do so.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How to Find Financing for Your Property<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you want to become a property investor, you\u2019ll need to obtain a mortgage on the rental property. It\u2019s becoming harder and harder to obtain a mortgage on investment properties these days because you\u2019re more likely to default on an investment loan than on your home mortgage. Because of this, lenders are much stricter when it comes to awarding loans for rental property investments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But with a little bit of planning, patience and creativity, you\u2019ll be able to secure financing on your first rental property in no time at all.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether you\u2019re a first-timer <\/span><a href=\"https:\/\/www.thehouseshop.com\/property-blog\/why-investing-in-property-will-be-the-best-thing-you-ever-do\/4280\/\"><span style=\"font-weight: 400;\">considering rental property investment<\/span><\/a><span style=\"font-weight: 400;\"> or you\u2019ve already invested in a couple of properties and just need some helpful insight, here are some tips to follow for financing your rental property.\u00a0<\/span><\/p>\n<h4><img loading=\"lazy\" class=\" wp-image-24714 aligncenter\" src=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2021\/04\/Blog2-12.jpg\" alt=\"\" width=\"420\" height=\"296\" \/><\/h4>\n<h4><strong>#1 \u2013 Pay Off Your Debts\u00a0<\/strong><\/h4>\n<p><span style=\"font-weight: 400;\">Getting your start in the property investment business doesn\u2019t mean you have to be debt-free, but it certainly helps. Before you begin to seriously search for rental properties, make sure you\u2019ve paid down all your debts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether they\u2019re credit card bills, student loans, medical bills or a home mortgage, pay down your debts as much as possible to improve your chances of getting approved by a lender to finance your rental property.\u00a0<\/span><\/p>\n<h3><strong>#2 \u2013 Make a Large Down Payment\u00a0<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Investment properties typically cost more than owner-occupant properties. If you were going to finance a home you planned on living in, you would only have to put three per cent down, but investment properties require a 20 per cent down payment because mortgage insurance doesn\u2019t cover them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before searching for an investment property, make sure you have plenty of money saved up so you can make a larger down payment to improve your interest rate.\u00a0<\/span><\/p>\n<h3><strong>#3 \u2013 Have Good Credit<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Many different factors can influence your financing, chief among them being your credit score. Investment property loans typically require a credit score between 620 to 680, but a strong credit score (740+) can keep your interest rates low.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your credit score is below 740, you\u2019ll have to pay a fee to keep your interest rate low or accept a higher one or start working towards <\/span><a href=\"https:\/\/www.loans.org\/personal\/understanding-your-credit-score\/\"><span style=\"font-weight: 400;\">understanding your credit score<\/span><\/a><span style=\"font-weight: 400;\"> and how to improve it.\u00a0<\/span><\/p>\n<h3><strong>#4 \u2013 Avoid Big Banks<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Perhaps your credit isn\u2019t as strong as you\u2019d like it to be or you aren\u2019t able to put as much down as you\u2019d like. Whatever your circumstance, if you\u2019re looking for a little more flexibility from your lender, it\u2019s best to avoid large national banks instead of opting for smaller financial institutions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A local neighbourhood financial institution will also have a much better understanding of the market and may have a stronger commitment to investing within the community.\u00a0<\/span><\/p>\n<h3><strong>#5 \u2013 Request Owner Financing<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">One strategy for obtaining financing on an investment property is to request owner financing in place of a traditional mortgage loan. Sometimes referred to as \u201cseller financing,\u201d owner financing is when the buyer of the property makes payment instalments to the seller until the purchase price for the property has been completely paid off.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Owner financing has its own advantages and disadvantages, but it benefits both the buyer and the seller and is a much faster way to close on an investment property.\u00a0\u00a0<\/span><\/p>\n<h3><strong>#6 \u2013 Limit Your Mortgages<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">If it\u2019s your first time investing in a rental property, then this tip doesn\u2019t really apply to you. But for investors with more than one property, you should remember to be mindful of the number of mortgages you have.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The more mortgages you have in your credit history, the less likely lenders will be able to help you finance another property. However, that\u2019s not to say it\u2019s impossible.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lenders will sometimes offer to finance to investors with five or more mortgages, but you\u2019ll have to make a strong case for yourself with a demonstrated history of good credit and pay 25 per cent down (as opposed to 20 per cent down if you have four mortgages or less).\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Investing in Your Property<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Congratulations! Now that you\u2019ve financed your first rental property, it\u2019s time to start doing what property investors do best\u2014making a return on their investment. To do this, you\u2019ll need to ask for a high enough rental price to turn around a profit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To make a return on your investment, it needs to be worth more than what you purchased it for, right? You can make a few easy upgrades to the property that aren\u2019t overly time-consuming or expensive but will increase the value of your property and allow you to justify asking for a higher rate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Higher-quality tenants who might be willing to spend a little extra money on more modern updates are looking for rental properties with a new look and feel.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Having <\/span><a href=\"https:\/\/www.thehouseshop.com\/property-blog\/3-must-have-kitchen-appliances-you-should-consider-when-moving-in\/13510\/\"><span style=\"font-weight: 400;\">stainless steel appliances<\/span><\/a><span style=\"font-weight: 400;\"> installed \u2014 including built-in washer and dryer units \u2014 adding window treatments and repainting the walls are just a few ideas that will increase the value of your property and hopefully help you make a return on your investment in the future.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Do Your Research to Be Successful<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Right now is a great time to start investing in rental properties. But before you get started, you must do some research and educate yourself about the property rental business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Save some money, keep your expectations realistic, and follow these tips for financing your rental property. Once you have financing taken care of, do a little research into finding the best <\/span><a href=\"https:\/\/www.thetruthaboutinsurance.com\/why-is-landlords-insurance-more-expensive-than-homeowners\/\"><span style=\"font-weight: 400;\">landlord insurance<\/span><\/a><span style=\"font-weight: 400;\"> to cover any additional expenses.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With a little bit of time and patience, you\u2019ll be on your way to a successful career as a real estate property investor!\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h6>Ref number:\u00a0THSI-2289<\/h6>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Have you ever envisioned yourself as a landlord or property manager? If so, right now might be the perfect time to start. Today, there are more renters now than homeowners, and the demand for apartments and rental properties continues to<span class=\"ellipsis\">&hellip;<\/span><\/p>\n<div class=\"read-more\"><a href=\"https:\/\/www.thehouseshop.com\/property-blog\/how-landlords-can-finance-their-rental-properties\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":81,"featured_media":24713,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wl_entities_gutenberg":"","_lmt_disableupdate":"","_lmt_disable":"","spay_email":""},"categories":[1,16,9],"tags":[],"wl_entity_type":[602],"modified_by":"THS","_wl_alt_label":[],"jetpack_featured_media_url":"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2021\/04\/Blog1-11.jpg","wl:entity_url":"http:\/\/data.wordlift.io\/wl0502\/post\/how_landlords_can_finance_their_rental_properties","_links":{"self":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/24712"}],"collection":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/users\/81"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/comments?post=24712"}],"version-history":[{"count":3,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/24712\/revisions"}],"predecessor-version":[{"id":24717,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/24712\/revisions\/24717"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media\/24713"}],"wp:attachment":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media?parent=24712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/categories?post=24712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/tags?post=24712"},{"taxonomy":"wl_entity_type","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/wl_entity_type?post=24712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}