Newbie advice for buying first SFR not owner occupied

3 Replies

Hello BP Community!

I'm seeking advice on how to acquire a first SFR without "house hacking." I have brought an investor on board to help me secure my first single family rental property. To analyze potential deals, what is a good interest rate guesstimate for a $250k home w/$25k down? I am using to calculate COC, CAP Rate, Cash Flow, etc but do not know a good avg value to insert for mortgage rate.

@Kiel J.  If you are looking at a conventional investment property mortgage, then you will need to put at least 25% down (i.e. $62.5 for $250k home). The rate for these mortgages are a bit higher. You could use 1% higher then a typical conventional loan to do your projections. It all depends on the circumstance of the borrower(s), loan and market, so no way to predict interest rate.
Good luck

@Kiel J.

@Upen Patel is correct.  You won't be able to get a non-owner occupied property for 10% down.  It will be 20% - 30%, depending upon the lender and your overall qualifications.

I have more basic questions...

If this is non-owner occupied, I assume it is intended as some kind of investment property, likely a buy & hold.  Why in the world are you targeting a $250k property?  It is unlikely a property at that price is going to cash flow.  If it does, I would be concerned about vacancy, since finding renters willing/able to pay the required market rate to maintain cash flow will be tough, and your pool of potential renters will be greatly reduced.

4% - 5% is a safe rate, assuming you can meet the down payment requirements.

I am interested to know what your exit strategy is.  Also, I'm not familiar with, but why aren't you using the analyzing tools right here on BP?  They are fantastic.