Can I buy a second property?

Asked by sixburgh90, Charlotte, NC Wed Sep 25, 2013

If I currently have a mortgage for my primary residence, can I get an investment (rental) property if I have the 20% down? From my understanding you need atleast 20% for an investment property, but what other factors come into play? Ex. Do I need all of my primary residence mortgage paid off, 50% of it, etc?

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Amy Baker’s answer
Amy Baker, Agent, Charlotte, NC
Wed Sep 25, 2013

A mortgage lender is going to look at all of your total income versus all of your debt. If you want to add a new mortgage payment for a rental property, your income will have to be high enough to qualify given both homes/mortgage payments and your other debts. In most cases a 20% down payment is required and the lender will also want to see that you have approx 6 months of mortgage and HOA payments in reserves after the 20% is put down on a new property.

I currently own two rental properties and work with lenders that are experienced with helping investors. If you have questions about buying/owning/managing rental property as well as qualifying, I would be happy to talk with you more.

Amy Baker
Allen Tate Realtors
1 vote
thanks for your help Amy! I will def keep you in mind.
Flag Wed Sep 25, 2013
Daniel Fisher, Agent, Charlotte, NC
Wed Sep 25, 2013
Good evening, Sixburgh.
Generally, you can get an investment property if you have a solid credit score and income to qualify for both your current mortgage and the new mortgage on your rental property. The amount of your current mortgage or percentage that has been repaid is not a factor. After a couple years of landlording and rental income reported on two tax returns, if you want to get another investment property, you should be able to include in your income 75% of the rental income net of expenses. There are some investment mortgages that require less than 20% down. If you have a full time agent with a Masters degree in Planning with Finance and over two decades of experience, working for you, you will likely do better in negotiations. I'd be pleased to provide that service. If you appreciate this answer, please give it a thumbs up, or if this was the most helpful answer, please say thanks with a best answer click.
1 vote
Robert Zito, Agent, Charlotte, NC
Wed Sep 25, 2013
First step, get a good mortgage broker to advise you on what your current credit and income , with the rental income will support. Be careful on the monies needed to possibly make the property livable, new carpeting, paint, etc., get an inspection by a reliable home inspection company on any property even before going to contract. It could be the best investment being cautious rather than sorry. Get a good realtor to assess the market area of interest and do a good comparable market assessment ( CMA) on the property of interest. Real estate is a good investment yielding depreciation and expense deductions while the property throws off income and hopefully appreciate in value. Good Luck!
1 vote
dave, Agent, Charlotte, NC
Thu Sep 26, 2013

Generally speaking you can qualify for an investment property with 20% down payment. The only other factors that come into play would be the same as if you were purchasing a primary residence. You would need income to support both mortgages and any other debt you may have. You would have to have verifiable assets for the down payment and of course a credit score that qualifies you to purchase a second investment property.

One thing most people do not understand is that you cannot count any future or current rental income (if you are buying a place that already has a tenant in place) until you have at least two years verifiable rental income.

If I can help you out in any other way please feel free to either e-mail me or give me a call at 704-519-7895.

Dave diCecco
Helen Adams Realty
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Thu Sep 26, 2013
Typically you're going to need at least 25% not 20% down to buy investment property. There's no specific amount you need to have paid off on your primary mortgage however you're income is going to have to be sufficient to carry both mortgages. You will not be permitted to get any credit for any of the rental income until you have a minimum of two years of documented experience as a landlord of income producing property. In addition the interest rate you will pay on the rental property will be approximately 1% more than current primary home rates. Right now it's in the 5.25 - 5.5% range.

Hope this answers your questions.
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