Let's say that you bought an inexpensive investment property for cash. Let's say that the property needed some work, and you fixed it up so that it is now ready to be rented. Now you'd like to get some of your money out of the property, so that you can either pay back your line of credit, or start in on another project.
How do you get your improved equity out of the property so you can move on to your next goal? Refinancing this type of property is different than financing owner-occupied houses.
In the first year since you purchased the propertry, most lenders will only lend on a percentage of what you actually paid to buy it. An exception to this may be if you can produce documented evidence of significant improvements that you have made since the purchase. If you can show receipts for the improvements, some lenders may be willing to lend based on the current appraised value of the improved home.
Another consideration will be the relatively small mortgage that such a property will justify. A number of lenders won't lend less than $40,000 or $50,000 as a matter of policy. If your project justifies a smaller loan than that, many lenders won't consider it.
You might also check with your own bank, with whom you already have a relationship. Banks will probably be better in this case than mortgage brokers, who would have to package and resell their loans on the secondary market, and therefore must adhere to FNMA or FHLMC requirements.
If you would like more information on how a qualified REALTOR with Lancaster County property management experience can help investors save money and reduce their risk, please call (717) 951-5552 or email brian@FindLancasterHomes.com .
©BrianSchulman2008
Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA. To learn more, visit http://www.FindLancasterHomes.com/ |
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