Investment Properties

Many new loan programs have emerged in the last few years that have made financing investment properties much easier. In the past, loans on non-owner occupied and investment properties required full documentation and sizeable down payments. That isn't the case anymore.

Residential investment properties with less than 5 units can be financed with a residential loan, while properties with 5 or more units and commercial properties require small commercial financing. Financing investment properties is often more complex and with higher fees than financing your primary residence. Working with a mortgage broker who is experienced in financing investment properties, is important for a smooth transaction.

Here are some features I can offer for residential investment properties such as rental homes, duplexes, triplexes, and fourplexes.

• 100% Financing
• Stated Income/Stated Assets
• No Ratio (No Income, Verified Assets)
• No Doc (No Income, No Assets, No Employment)
• Multiple financed properties
• Cash-Out Refinances
• Fixed Rate Loans and ARMs
• Option ARMs
• Interest Only

Appraisals

Appraisals on investment properties are typically higher than appraisals on your primary residence. Appraisals on one properties can be up to $500, while a four unit property can be $600 to $1200 depending on the area and type of appraisal required. In most cases, lenders require market rental surveys and operating income statements which results in part of the higher cost.

Documentation

In addition to the typical documentation required on an owner occupied loan, such as W2's, paystubs, and bank statems, be prepared to show additional documentation such as rental agreements, tax returns, and income statements from the property.

Lender Limitations

Many lenders have limits on the number of properties that they will finance for one borrower. In most cases, lenders will not lend on more than 4 properties. This often forces an investor to use multiple lenders who may not have the same pricing to finance the properties. I have a strategy that has allowed me to finance more than 4 properties with the same lender which resulted in a smoother transaction and better rates for my borrower.

Most lenders also limit the number of financed properties that a borrower may have. This can make financing any property, including the investor's primary residence difficult. In most cases, the limit is 10 financed properties. I have some lenders that either have higher limits, such as 50 financed properties or no limits at all.