Real estate is an inflation hedge.
Investment real estate is one of the best inflation hedges, as both the property’s value and its rental income rise with inflation.
Investment Financing Experts
JVM Lending’s advisors are experts when it comes to every type of investor financing:
- House Hacking
- DSCR – Using Rental Income Only to Qualify
- Hard Money
- Assisting with Seller Financing
- Fannie Mae and Freddie Mac
- Jumbo
DID YOU KNOW?
Individual real estate investors own over 74% of rental properties in the U.S.
- U.S. Census Bureau, 2022
Why we love helping investors. 🏡
(We love helping our clients build real wealth.)
Higher Net Worth.
The typical homeowner has a 40x higher net worth than non-homeowners – and that multiple is even higher for real estate investors.
Billionaires & hedge funds invest in all markets - so why shouldn't we?
In 2022, for example, when the media were screaming about a pending housing crash, Blackstone and JP Morgan set up billion dollar funds to buy residential real estate. You can read about it here and here.
Ability to get paid in 5 different ways.
(1) Rental income; (2) Equity Capture (from finding deals, and rehabbing); (3) Appreciation; (4) Forced Savings/Principal Paydown; and (5) Tax advantages from depreciation and expense write-offs.
Key Info About
Investment Financing
Down Payments
Down payment requirements range from 15% for conforming (Fannie Mae and Freddie Mac) loans to 40% for our best jumbo investors. For optimal financing, however, we recommend at least 25% down, as interest rates are significantly higher for loans with less than 25% down.
We only recommend lower down payment loans for investors who do not plan to keep their properties and/or their mortgages for more than a year.
Interest Rates
Mortgage interest rates for even the best investment property financing with 25% down are about 1/2% higher than the rates associated with primary residence financing. Interest rates are much as 2% higher for investment property loans with smaller down payments.
Other factors that impact interest rates include credit score, property type (multiple unit properties sometimes have higher rates), and loan amounts (very small and very large loans often have higher rates).
Loan Types
While investors can obtain both fixed and adjustable rate mortgages, we primarily recommend 30 year fixed rate loans for a variety of reasons. These reasons include the cost of the loans as well as the security that comes with a 30-year fixed rate.
House Hacking = The Best Financing Option Of All! 💵
What is House Hacking?
House Hacking is the practice of renting out other units or rooms in an owner-occupied property to general additional income that can be used to pay down a mortgage.
It is highly advantageous because House Hackers can take advantage of “Owner Occupied” financing – which is far more favorable than standard investor financing.
Lower Down Payments & Lower Rates
- Using Owner Occupied financing allows for as little 3.5% down.
- Interest rates are 1/2% or more lower.
Down Payment Limits
- FHA financing with 3.5% down is available for the purchase of up to 4 units, as long you occupy one of the units.
- Fannie Mae and Freddie Mac will allow for as little as 5% down for 2, 3 or 4 unit properties.
Overall, FHA financing is often the best and most flexible financing option for House Hackers, particularly if they have limited funds.
Important Things To Be Aware Of:
FHA Financing
There are cash flow requirements for 3 and 4 unit properties. Please consult with us if you are considering FHA financing for a 3 or 4 unit purchase.
Conforming Financing
With no income limitations, Fannie Mae and Freddie Mac require 15% down for 2 units, and 20% down (Freddie Mac) for 3 and 4 unit properties. Please consult with us if you are considering conforming financing and 5% down.
Single-Family Residences with ADUs
With accessory dwelling units (ADUs) or “in-law units” are much stricter, and it is unlikely that buyers of such properties will be able to use rental income to help qualify.
Seller Financing: What
You Should Know
If the seller is willing to finance the entire purchase or carry the entire loan, you probably do not need our assistance. If, however, the seller is only willing to carry a portion of the financing, then we would love to help.
BUT - To obtain conventional mortgage financing, you will still need to come up with a down payment of 15% or more.
Important Things To Be Aware Of:
- Some investors mistakenly believe that they can effectively obtain 100% financing by obtaining a conventional first mortgage and a seller-carried second mortgage that in sum equal the purchase price of the property. That is, however, not the case.
- No conventional mortgage lender will offer investor financing UNLESS investors come to the table with a substantial down payment.
- Conventional lenders will insist on being in “first lien position” in front of the seller.
- There is often no reason to employ seller-financing behind a conventional first mortgage UNLESS the seller is willing to offer very favorable terms.
Our seasoned Mortgage Advisors are able to discuss this in much more detail.
Contact us if you are considering seller financing.
Investors can use future rental income from a property to help qualify for financing.
Investors CAN use:
- 75% of the actual rent, of there is a tenant occupying the property
- 75% of the market rent estimated by an appraiser, if the property is vacant
- This applies to vacant units in non-owner-occupied triplexes and fourplexes.
Investors CAN'T use:
- “Short-term" rental income - like vacation rentals via sites like VRBO and Airbnb*
- “Mid-term” rental income – for lease terms of 30 days to 1 year*
*NOTE: Once an investor shows a history of earning "short-term" or "mid-term" on their tax returns, then they may use that income to help qualify for financing.
Investor Resources
An Awesome Calculator:
Rental Property Calculator
For investor education:
Connect with us on BiggerPockets
For mid-term rentals/corporate housing: Corporate Housing By Owner
Interested in financing with JVM Lending on your next investment?
We are committed to reinventing the mortgage lending model in order to provide outstanding service, low rates, and some of the fastest closing times in the industry.
