Interest Rates on rental properties!!??

Question

So I just purchased my first two units this month. One was a cash deal on a condo in a hot spot of town, the other is a 3/2 1770 sqft brick home on the other side of town. The 3/2 is financed for 30 years, but the interest rate is 4.8...my lender said the rate was so high because it wasnt my primary residents/ its a rental property. I am hearing that debt is cheap right now, but it doesn't seem to be in my case. I put 20% down and had to pay some kind of new FEE that the government put on secondary properties? What the heck am I doing wrong?

Hunter Jones · Answer

I will be shopping around for sure, I just had an off the market listing call me today for a 4 unit package that I would love to get, but I am not satisfied that that interest rate is the best....

Raymond J. Rodrigues · Answer

Im seeing rates in the mid 3's and 4's for investment properties depending on down payment, property type and credit score.

This is in Florida and Georgia. Definitely shop around a little. Investment property lenders have a wide swing on rates right now depending on their appetite.

Hong Tran · Answer

@Hunter Jones

Hi Hunter, I would suggest you shop around for a different lender. I just closed on a rental at 3.37%

Ryan Herting · Answer

Hey @Hunter Jones,

Due to changes in      Fannie/Freddie guidelines as it relates to second homes and rentals, pricing will be in this range. As banks vacate the scattered residential market it leaves limited options for financing this property. That is actually a great rate for where the market is currently. It’s a strong side-by-side comparison to what banks were offering to borrowers. Which was 5/1, 10/1 arm, 20 or 25-year amortization.  Keep up the good work and let us know if we can help. Depending on LTV, and FICO you might get closer to 4.5% currently.