First Rental Property

When you are looking to buy your first rental property, the first step you must take is to find a mortgage broker that you will be able to work with. When it comes to financing your rental property, financing can be obtained either through a mortgage broker or a bank.
I am a fan of doing your financing through a mortgage broker, as good mortgage brokers have an ability to put often times complicated deals together. Sometimes dealing with banks can be restrictive, as they do not have the same flexibility in finding solutions as a mortgage broker might have.

However, not all mortgage brokers are created equal. There are some very good ones, and there are some very bad ones. I have outlined 4 useful tips for you for when you are in the process of selecting your mortgage broker. Here they are:

1) Your mortgage broker should be a real estate investor

You want to be working with someone who is experienced in the field that you yourself are trying to get into. If your mortgage broker is a real estate investor, then he or she has experience in purchasing rental properties, and they have inevitably at some point purchased their first rental property. Since they are investors themselves, they would be able to offer you advice along the way. Make sure that your mortgage broker is a real estate investor. Experience counts!

2) Your mortgage broker must know your five-year investment plan

At the very least, your mortgage broker should know what your investment plans are over the next 5 years. This is very important because you are looking to build a long-term relationship with this individual. They (your mortgage broker) is going to be a very integral part of your real estate investment team. By knowing your five-year plan, they are able to advise you accordingly every step of the way. For instance, if your plan is to only buy one investment property over the next five years, they need to know this. This is because, the terms of the mortgage, would differ if you had plans of purchasing more than one rental property over the next few years. With mortgage financing for rental properties, good mortgage brokers are looking at how you can obtain financing for not just your first rental property, but also your second, third, or maybe even your 20th rental property, if that so happens to be your goal. Your mortgage broker must know your five year investment plan, as such they can set you up with the appropriate financing on your first rental property.

3) Your mortgage broker must keep up to date with what is happening in the mortgage industry

The mortgage financing world is ever changing. Interest rates often times change, and so too do the offerings from Banks and Lending Companies with respect to mortgages. Since there are so many changes, this creates opportunity for an individual looking to purchase their first property. When a good offer comes along from a Bank (such as a nice low interest rate), your mortgage broker should be up to speed of the changes as soon as they happen. That way, they can make you aware right away of all of the competitive offerings in the marketplace.

4) Your mortgage broker must have experience providing financing for other real estate investors

Often times, the more real estate investors that your mortgage broker works with the better for you. This is good for you, because your mortgage broker will have lots of practice in putting together deals for real estate investors. They will be proficient at this task, and will be able to deal with any roadblocks that are thrown in front of them. For instance, the reputation of your mortgage broker goes a long way when they are speaking to and negotiating with the mortgage underwriters at the banks or Lending companies. The mortgage underwriters are essentially the people who would review the particulars of your mortgage application. If the underwriter had any questions or concerns, they would converse directly with the mortgage broker to get the answers. If your mortgage broker has a solid history of putting together good deals, having a good relationship with the underwriters and the banks and Lending companies, then you are in good hands. The reputation of your mortgage broker is significant. They must have a track record of working with and putting together mortgages for other real estate investors.