Financing Condo Unit as Invesment

[Alexander Zurn]

Hello, I am again on the verge of purchasing my first unit! A small condo unit in a 4-unit Condo Complex. The numbers work, it cash flows VERY well. If rented right away, I could pay off in 10 years.

My problem is financing. I want to finance as an investment but here is the problem. It seems to be industry policy to not give a loan to a condo that is NOT 50% Owner Occupied. As of now, there is 1 owner and 2 renters in the complex. I would rent it and therefore make it 75% rented, 25% owner occupied. This is forcing me to owner occupy, which isn't the end of the world but it's not how I first saw it. NOTE: It is not HOA guidelines to have 50% owner occ. it is the financing (perhaps government guidelines) industry.

Any ideas of how to finance this as an investment? I understand I could owner occupy, put 3.5% down, live in for a year, and then start renting/cash flowing. I suppose this is why it has been on the market so long.

Any advice helps! Thank you

[Jeff Bridges]

Non-warrantable condo usually applies to condos that either are over 50% non-owner occupied or their financials are not in great shape and have over 15% deliquency rate. Non-warrantable condos are higher risk to lenders because if its all renters, owners are more likely to walk away in a crisis since its not their primary home. Apply that to an entire building, and lenders are left holding the bag. Some lenders will lend on non-warrantable condos (this is the term you use to ask if they would do this). Since not all do this, a mortgage broker can help you find the particular banks that are interested in doing financing on this property type. Not something openly advertised.