Looking to invest in a rental property

[Varsha Govindu]

Hi everyone!

I am looking to invest in a rental property in Michigan. I am considering some of the college towns in Michigan like Ann Arbor, Lansing etc. 

My concerns are: If I buy a place with the intent of renting, are the interest rates and down payments high on home loans? I have come across articles that say interest rates on home loans can be high as high as 10% to 20% if the house is not intended to be my primary residence. Is the best way to buy a rental property to start off as an owner occupant to get best deals on a home loan? And, how long do I have to be an owner occupant before I can move out and turn it into a 100% rental property?

Thanks!

[James Wise]

Originally posted by @Varsha Govindu:

Hi everyone!

I am looking to invest in a rental property in Michigan. I am considering some of the college towns in Michigan like Ann Arbor, Lansing etc. 

My concerns are: If I buy a place with the intent of renting, are the interest rates and down payments high on home loans? I have come across articles that say interest rates on home loans can be high as high as 10% to 20% if the house is not intended to be my primary residence. Is the best way to buy a rental property to start off as an owner occupant to get best deals on a home loan? And, how long do I have to be an owner occupant before I can move out and turn it into a 100% rental property?

Thanks!

Welcome to the site Varsha. Good news is the loan market is actually much better than you are currently anticipating right now. You can get a loan on a non owner occupied property (1-4 units) that will have a fixed interest rate in the 4%-5% range right now. The down payment required would be 25% on 2-4 units & as low as 15% on a SFR on a single family home assuming you have less than 4 other residential mortgages.