Looking to invest in a rental property

4 Replies

Hi everyone!

I am looking to invest in a rental property in Michigan. I am considering some of the college towns in Michigan like Ann Arbor, Lansing etc. 

My concerns are: If I buy a place with the intent of renting, are the interest rates and down payments high on home loans? I have come across articles that say interest rates on home loans can be high as high as 10% to 20% if the house is not intended to be my primary residence. Is the best way to buy a rental property to start off as an owner occupant to get best deals on a home loan? And, how long do I have to be an owner occupant before I can move out and turn it into a 100% rental property?

Thanks!

@Varsha Govindu , it's time to talk to some Lenders, no? I believe you'll find that "10% to 20%" is an exaggeration; more likely about (only) "1% to 2%" higher than owner-occupier, but yes, hard to find a 30y fixed. Welcome to BP...

Question: you have to live somewhere anyway, right? So, why rent when you can buy?

The answer to how long you'd be agreeing to live there is: 1 year. How hard is that? Cheers!

[Probably, the best of both worlds is to get an owner-occupier (low deposit?) loan for a 4-plex].

Originally posted by @Varsha Govindu :

Hi everyone!

I am looking to invest in a rental property in Michigan. I am considering some of the college towns in Michigan like Ann Arbor, Lansing etc. 

My concerns are: If I buy a place with the intent of renting, are the interest rates and down payments high on home loans? I have come across articles that say interest rates on home loans can be high as high as 10% to 20% if the house is not intended to be my primary residence. Is the best way to buy a rental property to start off as an owner occupant to get best deals on a home loan? And, how long do I have to be an owner occupant before I can move out and turn it into a 100% rental property?

Thanks!

Welcome to the site Varsha. Good news is the loan market is actually much better than you are currently anticipating right now. You can get a loan on a non owner occupied property (1-4 units) that will have a fixed interest rate in the 4%-5% range right now. The down payment required would be 25% on 2-4 units & as low as 15% on a SFR on a single family home assuming you have less than 4 other residential mortgages.

Welcome to BP I just sent you a pm.

Welcome to BP.  Good to see other (Northern) Michigan people on here.  Good luck with your investment endeavors.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here