SearchStepping into apartment investing
Eddy asks:
(updated on Monday, June 13th 2016)
I plan on starting to invest and starting small with apartments. I am still at the beginning steps of this property investment road.
Hypothetically, if I purchase an apartment which costs $60,000, it is paid off in full and I then start renting it out at round $200 p/w - If I intend to refinance the said apartment what are the requirements/checks that are needed to get 70%-80% of the $60,000 back so that I can purchase another apartment?
Our Experts Answer:
Apartment lending is more complicated than lending against other residential securities. Almost all lenders have differences in what they will and won't do.
Many lenders are not lending at all on standalone small apartments (sub 40m2) at the moment. You will also find that there are other considerations such as if the income comes from serviced apartments then often it may not be taken into account for future debt servicing. It is important that you have an understanding of these nuances if this is an area you plan on focusing on.
Besides these, it is normal lending criteria which should then come into play in order to allow you to extract the equity for further investing.
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