The housing market improves as more people buy properties. People usually buy residential and investment properties.
Between the two, investment properties are most sought after by people who want to make money in real estate. They usually flip and sell them. On the other hand, they also offer the property for rent. People are really enticed to engage in real estate business, especially when they have acquired the primary residences. The second homes they purchase becomes their medium for more money and more equity.
There is so much money in real estate when you are able to capitalize on the right investment property. The only problem is ever since the real estate market went down; it became more difficult for buyers to obtain investment properties. Any investor obtaining a Fannie Mae loan were subjected to a stricter standard in 2008.
However, in 2009, they changed their standards. This is in the hope that they could help improve their real estate market. Below are the investment property guidelines that you should be checking out:
1. Any investor can qualify for a loan that is backed up by Fannie Mae to a maximum of 10 properties only if they meet the underwriting standards.
2. Any borrower should have no records of foreclosure or even bankruptcy for the past 7 years.
3. A minimum of credit score is set to 720 if the properties purchased and financed are more than 4.
4. Reserve requirements are established depending on the property. 6 months reserve is required on an investment property.
5. Down payments for investment property is at 30%.
These conditions are really an advantage especially for those who want to invest on multiple properties. However, other conditions set by Fannie Mae remains to be stricter than ever like the loan to value and cash reserves. Nevertheless, the offer is still very enticing and can be beneficial for those who want to purchase wholesale properties.
More About Investment Properties
You have to decide what kind of investment properties to purchase. The most lucrative properties are usually the residential types. Nevertheless, you have to make a research on the type of properties in demand in your area. This is one way to be certain of great profits.
If you opt for financing, get your credit scores in shape. Lenders nowadays prefer to work with investors that are less risky. So you really have to show a great financial portfolio to qualify for the benefits that a Fannie Mae backed loan can give.
Aside from that, to avoid wasting time, go for sellers that are determined in selling their properties. This makes negotiation easier on your part.
Never eliminate inspection. This will always save you from thousands of dollars worth of repair. Inspection determines whether the property you are buying is of good quality of not. So if it is not worth the price you are paying for, you can negotiate and lower your cost of investment.
And lastly, work with great real estate professionals. Find a lawyer, a lender or real estate agents that can help you in working out your investments.