Second home as an investment property but too high interest....

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Second home as an investment property but too high interest....

Yangjee Sherpa
Investor · Santa Fe, NM · Member since 2016 · 20 posts · 2 votes

Hello Biggerpockets!

I am looking for a second home as an investment property with my partner. I already have my own home purchased in June 2016 and living in it ever since. The bank says we have to do at least 20% down and the interest will be up to 6% although market rate is between 3.5% to 4% due to an investment prpperty. We got the approval letter anyway for that high interest. My question is do you guys think I should go ahead for this rate, or I could buy the second house and live in there and rent my old house. Thank you in advance.

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  • Justin Marshall
    Real Estate Agent · Ankeny IA · Member since 2015 · 89 posts · 34 votes
    8y

    6% is not a bad rate for your first investment property.  I started at 5.75% and have dropped it over 1% within the past year with other purchases but you have to build a relationship with your lender.  I would be willing to bet that with a larger down payment you could possibly lower your rate as well.  I am assuming that you are looking at a buy and hold property since you are concerned with interest rates as well.  If you can get commercial lending any future purchases they should allow you to use the equity in your portfolio to continue buying.  Hope this helps or sheds some light on your situation.  Good luck

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Its impossible to say if your rate is high or not since we are not privy to your credit scores, dti , etc.

    Most people pay about 1% higher for an investment property than for an owner occupied rate.

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  • Yangjee Sherpa
    OP
    Investor · Santa Fe, NM · Member since 2016 · 20 posts · 2 votes
    8y

    Thank you Justin. Yes, your reply really did help. Thank you to Russell too.

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