That’s right! How would you like to have your tenants pay your monthly mortgage payments? This would mean; not a single penny from your pocket would be going towards paying off the mortgage. As you may know now, we are talking about a rental property. Here are some tips you should follow before approaching the official purchase of a rental property.

1. Look for a good/reputable real estate agent.
2. Look for a good/reputable mortgage broker.
3. Look for a good/reputable mortgage insurance broker.
4. Try to find a property that would not be vacant most of the time.
5. Try to find a property without major work that has to be done.
6. Make sure the property was not built too long ago (inspection will take care of these aspects).

Usually, when you purchase a four unit property, it will be classified as a residential property. If its is over, it will be put under as a commercial property. The issue with a commercial property is that it requires a higher ratio of an initial mortgage down payment compared to a residential property. This is where your mortgage broker/advisor would help, they will be able to provide information which will outline exactly what is what and the cost as well. You also would not have to worry about having a large sum of money saved up, to qualify for a large property. The reason is that; the rental income would help qualify for the loan. The lender will do some calculations to get an approximate value for the rental income and take that into consideration in the process of giving out the loan. You can read more about this in one of our articles here; “Would Rental Income Help Qualify For A Loan?”. This type of property is a great revenue puller, get in this market while you can! You would also need some insurance for your property other than the mortgage insurance. This insurance would cover anything caused to your building by tenants, IE: a fire.

Useful Links & Tools
Information On Private Mortgage Insurance (PMI)
How To Cancel Private Mortgage Insurance
Would Rental Income Help Qualify For A Loan
Save Time & Money From Your Mortgage
Mortgage Tools

3 Comments »

1. 

   [...] commercial mortgage is a loan made using real estate as collateral to secure repayment.A commercial mortgage is similar [...]

   Pingback by A breif review of online free mortgage « lagem-ba.com - News — January 20, 2009 @ 2:33 am

2. 

   You have highlighted some great tips there. I myself have had some good experiences with picking houses for buy to let clients as m Father was in the Estate Agency business. We also found that homes situated near Universities and colleges are a good bet too.

   yanjiaren’s last blog post..Newsflash: get 1,000 free shares before they all go!

   Comment by yanjiaren — January 20, 2009 @ 10:51 pm

3. 

   Thee are many types of good quality products available now for the letting Industry so it’s a good time to get in now while property prices are down but rental demands are high.

   Comment by James — January 20, 2009 @ 10:57 pm

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