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.

James Wise, Real Estate Agent in OH (#2015001161)

Welcome to BP I just sent you a pm.

Chris Silva, Real Estate Agent

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

    Melody Everett-Neddo

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