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Residential Income Property Financing: Part 2 of 3
Welcome to the second segment of a three-part series about income property. In this second segment we will be discussing financing options for residential income properties as well as the upside (and downside) of owning this type of property. Financial Concerns Financing options for residential income property vary widely from commercial or industrial properties. For one thing, most private lenders place size requirements on the apartment complexes they are willing to finance, usually five units or more. Smaller complexes just don't have the revenue generation potential required to make your loan officer feel comfortable. The good news is that residential income property loans usually carry a higher LTV ratio than other property types. If you recall from the first segment of this series, LTV (loan-to-value) ratio indicates the percentage of money your lender will lend you to the property's market value. An 80% LTV is the maximum most lenders will provide for residential income property. Loan terms usually range from 25 to 30 years with a maximum loan amount of up to $3 million. Current competitive interest rates can range from 4.70% up to 6.625% depending on several factors including your credit rating and the size of your down payment. Most loans for residential income property are termed as 'recourse loans'. This means that the lender has 'recourse' to your personal assets in the event you default on the loan. Needless to say, you need to make sure you are ready to assume the financial responsibility of making your payments in a timely fashion. Managerial Challenges Besides financial responsibility, residential income property management brings with it other unique challenges. Likewise, it demands certain skills above and beyond investment savvy and experience. To successfully manage your residential income property, you'll need a good combination of street smarts, interpersonal, and handyman skills. More than any other income property type, residential property will bring you into close contact with those renting or leasing your property. Possibly the most important part is screening those you rent to. Background checks, calls to previous landlords, and searching interviews can save you a lot of headache and money down the road. It's likely that at some point in the tenancy something will break or malfunction. If you have the ability to replace windows or wiring, know how to fix an A/C or refrigerator, or have rudimentary plumbing skills, chances are you will save some money by performing these tasks yourself. Sometimes dealing with tenants can be the hardest part of owning residential income property. How well can you deal with angry, demanding people? Do you stay cool, calm, and collected in tense interpersonal situations? If so, you'll be prepared to deal with some of the issues likely to crop up during your management experience. Conclusion It's important to keep your goals in sight when managing a residential income property. Sometimes it's easy to get bogged down in the day-to-day duties of running the property that you lose sight of making a profit. Know your rights as a landlord; know your bottom line as an investor. As with any investment, having an accurate idea of your time horizon will, to a large extent, dictate the amount of effort and money you should put into your income property. Cameron Brown is an internet marketer specializing in investment property. For more information about residential income property, please visit Security National Capital.
MORE RESOURCES: Commercial real estate could become a problem for midsize banks The Washington Post Signature Bank's New York Real-Estate Problem National Review South side hotel headed for start near downtown Fort Worth The Dallas Morning News 8 Best Places to Live in Texas, According to Real Estate Experts Travel + Leisure Elon Musk sounds the alarm on real estate, warning a spike in defaults on mortgages and commercial loans could hammer banks Yahoo Finance Elon Musk Warns Of A Real Estate Crash: Our Approach Seeking Alpha $6.29M estate hits market as most expensive home listing in Concord - Charlotte Business Journal The Business Journals Eight Must Reads for Real Estate Investors Today (March 28, 2023) Wealth Management Michael Saunders makes top 500 real estate ranking Your Observer Here Are NYC's Biggest Real Estate Loans in February The Real Deal Next Dor: From Fashion to Real Estate | Detroit Jewish News The Jewish News Crescent Real Estate exec heads to West Dallas investor The Dallas Morning News The Top Real Estate Companies in Georgia Real Estate GFP Real Estate Signs Eight New Leases Totaling 13291 SF at 209 ... Real Estate Weekly How do real estate agents get paid? Stephanie Jones tells us what we need to know when buying a home WLUC Real Estate Transfers (Week of March 27) Times Bulletin Mignon Lagatta Real Estate purchases Reno building | Serving ... Northern Nevada Business Weekly Plan B Investments Buys 70 Property Portfolio from Trei Real Estate Sovereign Wealth Fund Institute Foreigners Check Out Greek Real Estate Online GreekCityTimes.com New York Real Estate Journal's 2023 Women in Construction ... New York Real Estate Journal Online Commercial real estate firm, agents and staff recognized by parent ... Greater Wilmington Business Journal Real estate market hits seasonal slowdown in Capital Region The Saratogian Market Turmoil Slows Momentum for Real Estate Interval Funds Wealth Management Private equity real estate firm acquires St. Mary’s County shopping ... Maryland Daily Record Real Estate: March 13 – March 17 Newport This Week Wilton Real Estate Report (March 17-23, 2023): Five Properties ... Good Morning Wilton Shock And Awful In Commercial Real Estate Seeking Alpha Acento Real Estate Partners Buys DC-Area Apartments Multi-Housing News Forren retiring from West Virginia Real Estate Commission post Parkersburg News Real estate, utilities ETFs see outflows; crypto products lure inflows ... Pensions & Investments Who are the top selling real estate agents in Chattanooga? Chattanooga Times Free Press Erica Grossman Leading Douglas Elliman In Hamptons Real Estate James Lane Post Two Real Estate Agents Say Racism Was Part of the Culture at Brokerage The New York Times Real estate plans from candidates Brandon Johnson, Paul Vallas Crain's Chicago Business Real Estate Experts Rank TOP 8 Texas Cities To Live In 2023 Traveling Lifestyle Breaking Down Real Estate's Banking Crisis Nightmare The Real Deal Is Real Estate the Next Shoe to Drop? Investing.com Real estate developer Robert Rosenberg, who died Friday, had ... Greater Wilmington Business Journal Public Records: Muskingum County Real Estate Transfers Zanesville Times Recorder Prairie Land REALTORS® partners with MLS Grid to manage real estate data feeds, standardize vendor licensing Yahoo Finance Sheppard Mullin Lands Five-Attorney Real Estate Team Business Wire Tedisco Helps Open New Mechanicville Real Estate Firm The New York State Senate In Duluth, Real Estate Collides With Climate The New York Times 2023 Distinguished Real Estate Award University of Cincinnati State of Federal Real Estate | Transportation and Infrastructure ... The House Committee on Transportation and Infrastructure Link Real Estate Investment Trust : REIT's Rights Issue is 240% Subscribed Marketscreener.com Delray dream run real estate professional Pecotic set to achieve dream by combining work with tennis, sets goal of playing 25 tournaments this year TennisUpToDate.com City Likely to Settle with Ex-Real Estate Adviser For $9.4M Voice of San Diego Tahoe real estate TV show to launch in April Tahoe Daily Tribune Former Tampa Area Real Estate Professional Sentenced To 24 ... Department of Justice Estate Mogul Tied to SF Scandal Buys $15M home The Real Deal School of Business Launches Online Real Estate Development ... Montclaire News How the Banking Crisis Could Hurt Real Estate Lending Knowledge@Wharton |
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