Rental property purchase
A lender doesn’t always accept the rents on paper. We test the rents, the expenses, and vacancy before setting your maximum price.
Situation
You’re looking at a building where some or all of the units will bring in rent.
The starting figures
- Asking price
- $725,000
- Advertised rent
- $46,800 / year
- Taxes and heating
- $12,900 / year
- Available down payment
- $165,000
What the figures tell us
Gross rent doesn’t become qualifying income dollar for dollar. Whether you live in the building or not, the unit count and the lender’s method change both the down payment required and the capacity recognized. I always treat a vacant unit, or rent without a lease, cautiously.
Options to compare
We compare occupancy scenarios, how each lender treats the rent, and what the building does to your overall capacity.
The trap to avoid
The gross income on the listing shows neither the expenses, nor the vacancy, nor what the lender will recognize. A unit sitting empty or occupied by the seller gets its own separate assumption.
The decision to make
We set the maximum price and down payment that hold up with documented rent, real expenses, and a reserve for the unexpected.