Welcome Back, today we have the amazing Amber Romero to discuss Investment properties and the differences between Condos and Townhomes. A lot of people have been heavily influenced into thinking that buying and managing an investment property is easy. But is it? Let’s look at two of the most common Investment properties.
A townhouse is like a single-family residence home with the exception that you have one shared wall, you own the land where the property sits. A townhome looks more like a home, it could have a garage and a small backyard. There will be an HOA fee for the common areas and homeowners must abide by the rules. If you are buying this home as a primary residence, you can use an FHA, Conventional, VA or even an USDA loan – if the property is in a qualified rural area.
With a condominium you don’t own the land, only the 4 walls of the property and everything inside of it. The homeowner must also abide by the HOA rules and regulations. When it comes to mortgage financing, the buyer needs to make sure to choose the proper loan based on occupancy and whether the condominium project is warrantable.
Talk to your Loan Officer before Purchasing a Condo or Townhome because there are many aspects to account for such as HOA rules, occupancy, type of loan financing and down payment needed.
Breaking Down Occupancy, Financing and Down Payment:
Primary residence, or owner occupied refers to the concept of living in the property you own or will buy. Owner occupied loans have more favorable interest rates, a wide variety of loan programs and several down payment assistance programs available. You can apply for an FHA, VA, USDA or conventional with 0% to 5% down payment minimum.
Second homes, or vacation homes refer to properties that are used by the homeowner for some portion of the year and are not rented out as short term or long-term rental must be occupied by the borrower for some portion of the year. They must be suitable for year-round occupancy, these are one-unit properties. You can apply for a conventional loan with as little as 10% down payment.
Investment properties refer to a real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both. The property may be held by an individual investor, a group of investors, or a corporation. You can apply for a conventional loan with as little as 15% down payment with a 720+ credit score – a 25% down payment will give you better pricing on your interest rate.
Please reach out to us today if you or someone you know is interested in buying an investment property. We have lots of information that can be very useful to anyone looking into this to have a successful transaction and the prospect of turning it into an investment property with ease.