Los Angeles Property Management companies have an understanding on rental properties as a long term investment that when managed well, the property can become a reliable source of rental income. Unless paying for the rental property in cash, Los Angeles Property Management companies know one needs to secure a loan to purchase a property. It’s important to gather documentation of your finances, at the same time it’s important to collect information about the property you want to purchase. In doing this it will simplify the loan approval process.
All Los Angeles Property Management companies, as well as individuals, go through potential lenders that need to confirm financial responsibility, even when the unit is unoccupied and the monthly mortgage is still being payed.
- Credit report. Request a copy of your credit report, and make sure to review it thoroughly. Contest any issues. Always consider that the higher the credit score, in the eyes of lenders you’ll be more attractive, always do your best to take care of any outstanding credit issues before you applying for a loan.
- Bank statements. It’s important to pull together recent bank statements so the lender can see income availability. Needing to show how much money you currently have on hand for a down payment as well. Depending on the loan, you would have to to put down 10 to 20 percent at closing.
All Los Angeles Property Management companies know before applying for a loan, it is important to investigate the rental market and the viability of the property, especially as a rental unit. During this investigation, make sure to collect the following information:
- Rent rolls. If purchasing an existing rental property, know that rent rolls will reveal how much money is being collected for rent currently, also when current leases expire and what units are vacant. This informs the lender how viable the property is as a rental unit.
- Income and expense statements. The current rental property owner could share 12 to 24 months of income and expense statements. this also helps to determine the financial success of the rental property.
Los Angeles Property Management companies recommend before applying for a loan on a rental unit, that ensure the property is well maintained, making sure it has no outstanding issues and does not face any substantial cost increases. Collecting these details will show the lender this property could be a smart investment.
- Inspection. Conduct a thorough inspection of the entire property, looking for any major issues that may require fixing or replacing. Put a focus on existing signs of damage, looking at the condition of the roof, HVAC unit and plumbing, and the condition of finishes such as exterior and interior walls, driveway, sidewalks and flooring.
- Utility costs.You could review past utility expenses for the rental property, taking into account the expenses you will be responsible for and the ones the tenants will cover. It’s smart to contact the local utilities to ask about any upcoming rate increases, this could impact your rental income totals.
- Insurance. Los Angeles Property Management companies recommend securing a quote for insurance for the rental property. Your lender will want to know how much insurance cost will be, and needing to factor this amount, and all taxes, into the picture to provide a clear view of how much the rental property will cost
Los Angeles Property Management companies know that due diligence and being proactive in a rental investment can help secure a loan. Make sure to thoroughly understand the financial implications of the current investment, and at the same time anticipate expenses and upkeep, this will help you and your lender to determine whether this is going to be a prosperous investment.
For the latest in Los Angeles real estate and Los Angeles property management news, trends and tools, make sure to stay connected with our blog at: http://tgnpropertymanagement.com/blog/