Common Investment Property Myths
Before examining the benefits of buying investment property, lets bust two persistent myths.
Investment Property Myth #1: Buying a primary residence is the same as purchasing an investment property.
Reality: Although many people think of their homes as investments, a home is not an investment property unless you buy it for the express purpose of generating rental income or a profit upon resale.
Investment Property Myth #2: Home values have always risen, so a primary residence will end up being an investment property if you own it long enough.
Reality: Adjusted for inflation and local market conditions, home values have not always risen. Nationally and locally, housing prices are subject to boom-and-bust cycles. Regardless of how long you own a property, theres no guarantee youll make a profit when you resell it.
Improve Your Credit Score
Most rental property buyers will finance the purchase with a conventional loan .
Rates for these types of investment loans are ultra-sensitive to credit score. Following is an example of a buyer with a 650 score compared to a 720-score buyer.
Because of the lower monthly payments, the home buyer with the better credit score could afford to offer tenants a better rental price.
This real estate investor could also use the lower monthly payment to create more cash flow.
Fund Your Future With Blue Water
Whether youre a first time home buyer seeking to reduce your monthly housing costs or a seasoned buyer hoping to become the next savvy real estate investor, purchasing an investment property can be a brilliant decision and a mortgage for a rental property can be a great way to get some collateral under your belt for future investments or financial obligations.
At Blue Water Mortgage, we have helped countless borrowers figure out how to finance an investment property. If youre considering purchasing a multi-family home and want to leverage future rental earnings toward a mortgage, schedule a free assessment with one of our loan officers today to weigh your options and take next steps toward becoming a landlord.
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Make A Bigger Down Payment
The surest way to get a lower interest rate on your investment property is to make a bigger down payment. Much of the added cost goes away if you can put at least 20% down.
It might be worth borrowing against the equity in your current home to increase your rentals down payment. You can also buy a cheaper house, or find a foreclosure you can buy at below market value.
You could even consider if this is an exceptional investment borrowing against your 401.
Can I Get An Sba Loan For Rental Property
The SBA 504 loan is the best choice for buying commercial property. Money can be used to buy a building, finance ground-up construction, or rehab an existing building. With the SBA 504 loan, you are likely to have the lowest interest rates and a 25-year repayment term.
Borrowing limits are normally $2 million for commercial property. Key requirements of this loan include the owner must occupy 51% of an existing building or 60% of a new construction building.
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Why Choose Us For Your Colorado Investment Loan Needs
Here are a few reasons to consider Front Range Mortgage as your property investment mortgage company:
We know the housing market in Colorado inside and out, both in the Front Range area and beyond. We can help you overcome barriers to financing so that you do not miss out on a valuable investment opportunity.
Closing fast is among our specialties. Well let you know upfront if we can process your investment loan within your required timeframe. Youll never be left guessing, and youll never lose an opportunity because of closing time.
We have helped real estate investors with a broad variety of financial situations and goals to fund their purchases throughout Colorado. There is no scenario we are not ready to handle. As dedicated and creative problem-solvers, we will work aggressively to help you achieve your goals.
We are Colorado Local, Colorado Only, Colorado Proud. Being a local company rather than a big bank, we are able to spend as much time with you as needed to match you with the investment loan which is best suited to your needs.
Investment Property Credit Score Requirements
When you finance an investment property, lenders generally want to see a better credit score than they do for primary residence buyers.
For instance, Fannie Mae borrowers putting at least 25% down could get approved with a 620 FICO score for a primary home. That minimum credit score increases to 640 for a rental.
If you dont have great credit, you can try an FHA loan its underwriting is much more lenient.
FHA loans are available for homes with up to four units, and credit score requirements start at 580. The catch? You must live in one of the units, so the building is still technically a primary residence.
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Understanding Your Quote And Percentage Rate
Your rate quote is based on a variety of factors and delivers the most accurate results possible based on your inputs.
- Detailed costs breakdown: Click on the view tab under details to see an itemized list of all estimated costs.
- Rate & APR: Your rate is the anticipated interest rate. The APR is the total cost of your loan, expressed as an annual percentage rate.
- Origination charges: Sammamish Mortgage doesnt charge industry-standard lender fees, so the amount for origination fee will typically be zero.
- Discount points: You can buy points by paying an amount for each point equal to 1% of the purchase price, and lower your interest rate by up to a quarter of a percent for each point purchased.
- Monthly mortgage payment: This includes the principal and interest included in your base monthly payment.
- Estimated third-party charges: This includes the wide range of fees included in your closing costs.
- Closing costs: The closing cost total listed includes everything except prepaid items such as property taxes, homeowners insurance, and daily interest.
- Private mortgage insurance premiums: PMI is required on loan to value ratios over 80% . We offer reduced PMI options with as little as 3% down.
- Rate locks: We can lock your rate from 30 up to 180 days.
Best For Commercial Property: Lendio
Why We Chose It: We chose Lendio as our best for commercial property loans because their marketplace platform is the easiest way for an investor to fill out one application and receive offers from multiple competing lenders.
Wide variety of financing options and lenders
Personalized guidance and expertise to help you interpret your loan offers
High interest rates on some loans
You have to fill out their online application to see loan terms
Lendio is a free online service for investors where users receive potential commercial loan offers within minutes from the company’s marketplace of more than 75 lenders. Over 300,000 loans have been funded through Lendio, giving it a good reputation for success.
A marketplace like Lendio is great for commercial property investors because they can quickly and efficiently shop for the best terms. Unlike other commercial property options, they make the process simple with one application to shop rates.
Lendio lenders underwrite residential, multi-unit, and commercial real estate loans, as well as an array of business loans too. Down payments can be as low as 3.5% if you qualify for one of the agency loans, like FHA. Otherwise, traditional commercial property loan programs require 25% to 30% down.
Interest rates start at 4.25% on the Lendio platform for commercial property loans. Terms range from 20 to 25 years and take a minimum of 45 days to fund. Commercial property loan amounts range from $250,000 to $5 million.
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Investment Property Loans In Denver Co
Are you looking for a second home, vacation property or rental? The Colorado real estate markets offer many exciting investment opportunities.
To maximize your return on investment, you need a competitive mortgage loan from an experienced lender. Thats where UpRoar Financial can help!
Colorado Commercial Mortgage Benefits
A commercial mortgage broker with over 30 years of lending experience No upfront application or processing fees Simplified application process Up to 80% LTV on multi family , 75% on commercial Terms and amortizations up to 30 years Loans for purchase and refinance, including cash-out 24 hour written pre-approvals with no cost and no obligation
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What Can You Do With A Colorado Investment Loan
An investment loan may be right for you if you have any of the following goals:
You are purchasing a second home or vacation home.
You plan to rent out a single- or multi-family home, apartment, or other residential building.
You are buying property to fix and flip.
You are purchasing property you expect to increase in value over the years ahead purely as a financial investment vehicle.
House Flipping Pros & Cons
- Handsome profits are delivered fast and in lump sums.
- Potential for quick and large returns.
If you watch HGTV, you know the drill.
First, buy a slightly distressed property in an up-and-coming neighborhood for less than market value or less than its near-future value. Next, refurbish this fixer-upper into a model home. The moment the facelift is done, find a buyer willing to pay more for the property than you invested.
Rinse and repeat.
House Flipping Cons
The biggest mistake made by many newbie house flippers is underestimating the cost of purchasing and fixing up the property. As a house flipper, youre betting you can sell the renovated house at a significant markup before ever-escalating costs destroy your profit margin.
This isnt a game for naïve or impatient people.
A successful flipper thoroughly researches the local market before purchasing an investment property. The ideal neighborhood is one where homes are still affordable but appreciating fast.
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Find A Mortgage Loan Officer In Colorado
Our local mortgage loan officers understand the specifics of the Colorado market. Let us help you navigate the mortgage process so you can focus on finding your dream home.
Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC. Equal Housing Lender
Annual Percentage Rate represents the true yearly cost of your loan, including any fees or costs in addition to the actual interest you pay to the lender. The APR may be increased after consummation for adjustable-rate mortgage loans.
The rates shown above are the current rates for the purchase of a single-family primary residence based on a 45-day lock period. These rates are not guaranteed and are subject to change. This is not a credit decision or a commitment to lend. Your guaranteed rate will depend on various factors including loan product, loan size, credit profile, property value, geographic location, occupancy and other factors.
VA Loans – Annual Percentage Rate calculation assumes a $270,072 loan with no down payment and borrower-paid finance charges of 0.862% of the base loan amount, plus origination fees if applicable.
year U.S. Bank
How To Get A Lower Investment Property Mortgage Rate
- Have a good credit score. Youll need a minimum 640 credit score to qualify for an investment property mortgage but a lower score wont get you the most competitive interest rate or reduce your minimum down payment requirement. Aim for a score of 700 or higher.
- Make a larger down payment. Contributing more than the minimum down payment means youll borrow less money and reduce your lenders risk. Consider putting down more than 20%.
- Reduce your existing debt. Your debt-to-income ratio compares your monthly debt payments to your monthly gross income and shouldnt exceed 43%, in most cases. Youll need plenty of room in your budget to cover the mortgage payment for an investment property, though 75% your projected rental income may be factored into the equation. Dont forget the other expenses of a rental property, too these include maintenance, repairs, homeowners insurance, property taxes and fees to screen tenants.
- Boost your cash reserves.Cash reserves are liquid assets you have on hand after youve covered your down payment and closing costs. Typically, lenders look for at least six months worth of mortgage payments in cash reserves for investment properties, but it wouldnt hurt to have a years worth or more. Since an investment property can be risky, the extra cash cushion shows youll have money to make payments when your property is between renters.
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Invest In Colorado Real Estate Now With A Competitive Loan
Are you ready to invest in your dream property? We work with real estate investors in Colorado. To get started, please give us a call today at to schedule your consultation.
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Colorado Commercial Mortgage Loans
Select Commercial provides apartment loans and commercial mortgages throughout the state of Colorado including but not limited to the areas below.
About Select Commercial Funding LLC
We are commercial mortgage brokers focused on providing the best commercial mortgage financing solutions for each deal and every client. We manage every detail of the commercial mortgage lending process from start to finish and are proud of the reputation we’ve established with our clients. We act as your professional mortgage loan advisor to help find the optimal commercial financing solutions for you by offering personalized service and custom tailored loan programs to suit your individual needs… View More
What do commercial mortgage lenders consider when reviewing a commercial mortgage loan application? Sign up now for your Free Guide.
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Types Of Commercial Loans In Colorado
Investment Property Mortgages
The types of mortgages available for these types of properties are Conventional, CMBS / Conduit, Insurance, and Agency products. Bridge and/or Construction mortgages are also available on a case-by-case basis in order to reposition, stabilize or construct buildings. Commercial real estate investment properties can include office, retail, industrial/warehouse, self-storage, healthcare , hospitality, , and mixed use.
Owner Occupied Commercial Mortgages
Owner-Occupied commercial real estate properties in which the owner occupies at least 50% of the premises and can include office, retail, industrial/warehouse, self-storage, healthcare , hospitality , mixed use, or any other type of commercial property. The types of mortgages available for owner-occupied buildings include Conventional, Insurance, and Agency programs including FHA / HUD, SBA, and USDA. Construction mortgages are also available on a case-by-case basis in order to develop or reposition a property for the owner’s use.
Real Estate Investment Loans In Colorado
Investment property financing is utilized by people as a short-term technique to obtain a residential or commercial investment property or to get refinancing for an existing investment. The right Colorado investment property loan, with ideal provisions and lending rates, will assist real estate investors in reaching their objectives.
Investment home mortgages, since they are fast closing and easy to be approved for, provide Colorado real estate investors incredible benefits. Privately owned loan companies, unlike virtually all banks, will lend funds to an individual who is a self-employed borrower, so long as the house can bring in a profit, and the borrower is knowledgeable in real estate undertakings, and has a transparent and sensible exit strategy and demonstrates the fiscal ability to pay back the borrowed funds. The applicant needs to be able to put a down payment on the house or make use of preexisting equity. In comparison with typical finance companies like banks, private mortgage lenders require much less forms and documents, helping make private real estate investment loans in Colorado fast closing.
The couple received $120,000 per year net from the home. A weak credit score of 460 meant it was nearly impossible to work with a regular bank to recover their personal expenditure of $150k. A real estate investor loan at 65% LTV with Read Rock Capital gave the couple $780,000 and helped them recoup their personal investment in the property.
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Live Colorado Mortgage Rates
The State of Colorado has seen significant increases in its real estate market in recent years. Now may be the perfect time to enter the Colorado market. If you are considering buying a home in Colorado and plan to obtain financing, you need to put in the effort to acquire the best mortgage rate.
Shopping around for current mortgage rates will help you save money in the long term. Sammamish Mortgage has been serving Colorado home buyers since 1992 and can provide you with a competitive mortgage rate today. Contact one of our mortgage professionals to learn more and check out our mortgage rates today for your Colorado home.
Best For Rehab Loans: Lendingone
Why We Chose It: LendingOne earns our nod for best rehab lender because they are one of the very few commercial lenders that make it easy to get a pre-approval letter, they finance up to 90% loan-to-cost and provide lower rates and fees than their competition.
Pre-approval/proof of funds available online within minutes
Founded by investors to improve upon traditional lenders limitations
$175 charge for each draw
Only available for one- to four-unit properties, no commercial
In 2014, Bill Green and Matthew Neisser founded LendingOne in response to their frustrations felt toward the difficult lending environment from rigid bank criteria and the easier, though more expensive, hard money alternatives.
As a direct private real estate lender, LendingOne has become the best rehab lender in the industry because they help investors get what had been missing in the market, such as pre-approval letters and proof of funds, higher leverage, and lower rates and fees.
LendingOne offers fix-and-flip and rehab-to-rent loan products. Down payments range from 10% to 20%. For rehab to rent, they have a 30-year fixed-rate loan as well as 5/1 and 7/1 ARM loans. Their fix-and-flip loans can finance up to 90% of your repair costs. Two years of interest only payments are an option on the fix-and-flip loans too. LendingOne loans on two- to four-unit properties only, including condos and townhouses.
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