Buying A Fort Lauderdale Investment Property

Now could be  a great time to buy an investment property especially with rents going up.  It is one way to secure in your financial future.

In order to purchase a residential (1-4 units) investment property in Florida you will have to put down at least 20% on a 1 unit property.  That could change but right now there aren’t any mortgage insurance companies insuring loans in the State of Florida and mortgage insurance is required on any loans with less than 20% down.

If you are able to put down 25% you are better off doing that because you will get a better interest rate.  Fannie Mae & Freddie Mac have what’s called a Loan Level Price Adjustment and theirs a higher cost associated with it when putting down 20%.   If you want to compare it to rates you see on 30 year fixed loans when it’s a primary residence with 20% down you could get the same rate with a 3% cost versus a 1.75% cost with 25% down.

If you are using rental income from the subject property then you will need 2 additional appraisal forms.  Fannie Mae Form 1007 which is to estimate the market rent and Fannie Mae Form 216 which estimates the operating expenses.  Each form adds about an additional $100 to the estimated cost of $300 for an appraisal of a 1 unit property with a value less than $600,000.

If you are using rental income from the subject property you will also need Rent Loss Insurance which is an insurance for loss in rental income due to property damage.  Make sure to consult an Property & Casualty Expert.

Contact me for more information on investment properties especially if there is more than 1 unit.