borrowers will buy the property, per- form the necessary rehab and then take out the long-term loan when it is precisely right for them to do so. Another thing to consider with certain lenders when determining if the long-term loan is right for you is how long you want to hold on to the property for. On long-term loans, a pre-penalty penalty can come into play. It can differ from lender to lender, but for RCN Capital, the pre-payment penalty period is for the first five years of the 30-year loan. This will only come into play if you want to get rid of the property in the first five years after taking out a loan. Be sure the long-term rent- al loan is what you want so you can avoid paying unnecessary fees and lose out on a money-making oppor- tunity. There are always alternatives such as the short-term rental and the fix and flip loan product as well. There is no doubt that there are advantages to the long-term rent- al but it’s also a big commitment. If you are ready to hold on to the property and make it a rental that serves as passive income than the long-term rental is right for you. For long-term rentals, meeting the necessary guidelines for you to qualify for the loan will also let you know if the long-term loan is right for you. Certain lenders need to see experience and a minimum FICO score so as an investor it is important to keep tabs on what the number is at all times so you can be sure you’ll qualify. You can save yourself a lot of time by being on top of those certain things to know when it is worth applying or not. At RCN Capital, for 1-4 unit prop- erties, the minimum FICO score is 620, however if you are looking for a long-term rental loan on a multifam- ily property (5+ units) then you will need a FICO score of at least 680.
A partner can be brought in with a FICO score that meets those mini- mum requirements if you yourself do not, but they will have to sign on the loan and be a co-guarantor. One of the last important aspects of determining whether the long- term rental loan is right for you is deciding what kind of investor you want to be. There are two main choices as you can go the short- term route with fix and flips and making quick cash post-renovation by putting it back on the market or you can be more of a landlord, be invested in tenants and relationships with them while accruing the passive income over a long period of time. If you prefer the latter than the long- term rental loan would be a strategy that is perfect for you. Acting as a landlord and making sure all your units have tenants, and the tenants are provided for when necessary is all part of the long-term rental strategy. It is less labor intensive but there is still work that needs to be done for those rental properties. Long-term rental properties have so many advantages, but it is a must that investors do their due diligence and find out if the long-term loan is right for them. For any questions on long-term rental loans or any gen- eral questions regarding real estate investment properties, don’t hesi- tate to reach out to RCN Capital! •
mean it is always the best for you and your investment plans. As mentioned earlier, the 30-year loan program is typically a scenario where the lender will not allocate any rehab funds. On a long-term loan having that property ready to be rented out to tenants is a big plus for the lender and minimizes the risk on their end. If as an investor, you know your ultimate plans are to make some renovations on the property and turn a real profit, the long-term rental loan might not be for you ini- tially. On the other hand, one of the most popular times to take a long- term loan is to refinance after a fix and flip loan is completed. This way, you have increased the value of the home through renovations and the amount you can charge for rent. With the security of a 30-year loan and the value of a better property, a lot of
Nate Zielinski, Junior Business Development Coordinator, joined RCN Capital in 2020. He adds his ambition, communication skills, teamwork, and
public speaking ability to RCN’s Business Development team. Nate’s goal will be to recruit new, long-lasting business relationships with brokers and borrowers as well as maintain the strong relationships RCN Capital already has in place. Nate’s prior work experience includes sales, advertisement, copywriting, and social media. Nate graduated from the University of Connecticut in 2015 with a Journalism degree.
thinkrealty . com | 23
Made with FlippingBook Online newsletter