Thinking of buying a rental property this year, but not sure how to go about financing it? Here are some options to help you leverage your money in today’s market.
- “House Hacking”
Purchase a house with intent to occupy it for at least one year. This allows buyers to qualify for owner occupied interest rates (typically lower than investment rates) and then convert the use to a rental later. Continue doing this with each home purchase and eventually you will own a fleet of rentals. - Purchase Existing Rental
Purchasing an existing rental property allows the buyer to show an income history for the subject property. This can be used to offset the monthly mortgage payment and help buyers qualify for purchasing rentals. - Debt Service Coverage Ratio
A DSCR loan allows a buyer to qualify for purchasing a rental property based on a location’s forecasted rental income. An appraiser verifies the purchase value of the home and the fair market value rent of that home and then uses that to help qualify the buyer for the monthly payments. - Buy a Multi-Unit House
Instead of purchasing a single-family home, buy a multifamily property like a duplex. This allows an owner occupied interest rate and provides a space for you to live while you rent out the other unit. Eventually, you can move out and convert all the units to rentals.