What is the best way to rent out a property that has a mortgage?

Asked by ronald.lwilliams, San Diego, CA Sun Aug 26, 2012

I want to finance a property, preferably a condominium, and then rent it out.

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carlos parra…, Other Pro, Monrovia, CA
Mon Aug 27, 2012
Have you purchased already or are you about to purchase or are you refinancing your current property?
If you have not purchased, calculate your Cap Rate before you purchase. this will help you determine if you are making a good investment.
If you have already purchased, then work backwards from what your expected rental income will be based on local market rents. Only finance what you can cover with the rent. Make sure to add the appropriate monthly real estate taxes and insurance. This way it will at least "pay for itself". You may also want to include some money for a maintenance fund and a downtime fund. so you don't have to go out of pocket.
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Sang and Son…, Agent, Los Angeles CA 90069, CA
Mon Aug 27, 2012
Condo purchases as rental property has become very popular especially in the last few years.
You just have to make sure that you have enough down payment; the loan itself allows for you to take ownership as non-owner occupied unit; and also need to make sure that HOA allows you to purchase as a rental property. Also do a thorough research on the rental market for the area so you will not be in the negative each month.
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Douglas Perez, Agent, Los Angeles, CA
Mon Aug 27, 2012
Get a non-ownwer occupied mortgage loan for that property.
For a condo, find out first to see if the cc&r's and by-laws allow unit to be rented out.
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Kathleen Bec…, Agent, Santa Monica, CA
Mon Aug 27, 2012
Hi Ronald:

You may want to consider that many mortgages require the owner to live in the property for 1 year prior to renting it out.

Make sure that when you do the financing, that you get the type of loan that does not require an owner occupant. FHA loans require the owner to occupy the property for the 1st year.

You may want to consider putting down 20% or more and doing a conventional loan rather than an FHA loan.

Also, check with the condo association to see if rentals are allowed and what percentage of units in the condo complex are allowed to be rental units.

Good luck!

Kat Becker, Realtor
Estates, Residential, Commercial
Prudential California Realty
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Ron Escobar -…, Agent, Beverly Hills, CA
Sun Aug 26, 2012
You will need 25% downpayment. I would advise buying a duplex or four pled instead.

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Fred Glick, Agent, Mountain View, CA
Sun Aug 26, 2012
You need to put 20 percent down among other things.

Check with a mortgage broker to see what you qualify for.
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Sinead McAll…, Agent, Oceanside, CA
Sun Aug 26, 2012
Hey Ronald,
I remember answering a few questions for you back in May and now I see you have several more. All of the rental properties that I work with have mortgages on them. Some are long term rentals, some are vacation rentals. It is important to buy in a complex that allows the type of rental you are interested in pursuing. I would be happy to advise and discuss with you personally, so feel free to contact me directly and I can assist!

Sinead McAllister
McAllister Homes Real Estate
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Keith & Kins…, Agent, Verona, WI
Sun Aug 26, 2012
A mortgage won't prevent you from renting a property. Our rental properties have a mortgages on them. One thing that could prevent you from renting a property would be a condo association. Many associations do not allow rentals. The associations that do allow rentals are typically harder to sell and finance because lenders are a bit more strict about these.

Also, if you are purchasing a property that you do not plan to personally occupy, usually closing costs and interest rates are higher.

Best of luck.
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