Refinacing single family rental property.

[MichaelG]

I recently became a landlord. I used the same method that many people use to accomplish this feet. I bought a new house and could not sell the old one.

I only owe 50% of the market value and would like borrow some equity to invest elsewhere. My question is, will the bank use market value or a value based on income?

[ivanziggy]

The income value approach is used on multifamily property, in youR case i think the bank will use the market value approach since it's a single family property.

[MichaelG]

Thanx for the reply Jvan. I need to let the listing expire before I try to refinance but I will let you know how it goes.

Another question I have...is a 12 month lease good or will the bank want a longer lease.

[admin]

Mike,

It is the case that lenders like to see longer leases and are more likely to make a loan on a unit that has a longer lease. However, for the most part whether your lease is 6 months or 12 months is going to matter very little to a lender. Where it starts making a difference is when you have 5 and 10 year leases. And situations like these are not the norm for residential real estate except in the case of some downtown prestigious high rise.

[MichaelG]

I am glad to here that. My new tennant was a little uncomfortable with a 12 month lease. We signed a 6 month lease Today.

[admin]

Congradulations on finding a tenant.

[MichaelG]

I think he is a perfect candidate for an installment sale.

[admin]

Looks like you will have everything squared away as long as he pays his rent on time.

[MichaelG]

He is young, but he is old fashion. He paid first month and deposit in CASH! He was in his last rental for eight years!

[admin]

Sounds like a good tenant as well. Can you give us an update on how things are going forward for you and how likely your tenant is to purchase?