A Quick-Tip Guide to Rental Property Loans

Rental property loans are a great option to help you get into rental property investing.

Many people turn a significant profit in renting out multiple vacation properties. It’s a fairly simple field to get into, the returns are lucrative, and today’s technology makes access easier than ever.

With marketplace apps like VRBO and Airbnb, getting your rental property in front of the right people and keeping bookings full is simple and inexpensive.

You simply add your listing, wait for inquiries and verify the location is kept in great condition. Sometimes you may need to hire a cleaning company or repair the property, but if you’re setting your rental prices right, you’ll be able to cover all of the expenses and more.

Rental property loans are loans used specifically for rental or investment properties and not owner-occupied properties.

When you’re considering rental property financing, you should understand all of the qualifications and requirements.

Knowing what types of financing is required for purchasing rental property will help you choose the right lender for your investment venture.

Some rental properties are not eligible for standard financing or mortgages, in which case it is necessary to seek out a rental property loan specialist.

Rental property loans are a great choice for many people but there are some things you should know before you fill out your application.

A rental property loan may be the right option for you if you’re looking to make some passive income while renting out a separate location that is not owner-occupied. 

It’s important to remember, when applying for a rental property loan, if you’re able to live at this location as the owner. Some rental property loans allow owners to also be tenants, however, other lenders or loan programs require the owner not be a tenant for any period of time. 

Rental property loans typically have strict requirements for owner-occupied living. When you are considering a rental property loan versus a standard loan or mortgage, be sure to read through all of the terms and conditions closely.

You may be able to stay at your rental property location as a tenant for a brief period of time which would allow you to use the location as a vacation spot, but your contract terms will specify the length of time and amount of trips per year you would be allowed to take without being considered a resident of the property.

With a standard mortgage, you will likely get a lower interest rate. Standard mortgages take a lot more financial information into account. Plus, with a standard mortgage, since the owner is living in the property, there is less of a risk.

With a rental property, especially vacation rentals, there is a higher risk that an owner will stop paying or abandon the property since it is not their primary residence and they have other housing arrangements.

Taking these factors into account, rental property loan interest rates are a bit higher than standard mortgages.

Additionally, with many standard mortgage options, your down payment can be as low as 0%. However in the US, the average down payment is around 6%. With a rental property loan, you must have at least 15-20% for the down payment.

One of the biggest obstacles for some people who want to start earning cash from a rental property is getting a loan despite their credit score.

With rental property loans, whether it’s through a standard mortgage lender or alternative lender, you can have a score as low as 580 and still qualify. 

Rental property loans are a great option for anyone who wants to purchase small multi-family homes or multi-unit buildings. With low credit requirements, rental property loans are more accessible than ever. 

If you’re looking for a pathway to passive income, a rental property is a great option. You can purchase a multi-family unit and start long-term leases or short-term leases, or you could rent out your location as a vacation rental.

There are so many options for purchasing a rental property and finding a rental property lender.

VRPL can help you with:

• Airbnb Financing: Looking to purchase a property to lease out on Airbnb? VRPL can help you with that!
• Stated Income Lending: If you’ve had trouble finding a lender in the past for a vacation or rental property, talk with us. We can walk you through the options of a stated income loan.
• Vacation Rental Loans: We specialize in helping people like you find the right vacation rental loan for their next investment venture.

Contact VPRL to find out more about our lending programs and how we can help you get financing for your next real estate investment.

Today’s technology makes it easier for rental property owners to fill up their bookings and find customers fast. Rental property investing has been a great cash flow opportunity for many investors.

You will need to determine exactly what you’re going to be using your rental property for, this will help you search for the right lender.

Once you decide whether you’ll live in the property and rent out other units, or if you’ll use it as a rental property only and live at another primary residence, you can apply for a loan.

With a rental property loan, make sure you remember the down payment requirements and take this into account when planning for a purchase.

Looking for help finding the right vacation rental property loan for you? Contact VRPL today at 1-888-999-4375!