Acquiring residential properties to generate revenue streams

On Behalf of | May 25, 2022 | Real Estate

Investors interested in Florida’s housing market to generate income may consider buying residential properties to offer as rental units. Both cash and loans generally become part of the purchase transaction. As noted by The Mortgage Reports, lenders may review a property’s potential for generating revenue when approving loan applications.

Applicants may help qualify for mortgages by submitting a property’s financial records. A lender may then review current rental agreements and maintenance expenses. Property income statements could provide details showing how much applicants may realistically afford to make in monthly loan payments.

How lenders may review applicants’ combined revenue sources

Apartments and multifamily homes typically attract experienced investors to the Sunshine State. If an owner lives outside of Florida, the cost of maintaining rental properties may include hiring a local property manager. A professional management arrangement, however, cuts into an investment unit’s profit margin.

Lenders may consider up to 75% of a property’s future rental income as part of a borrower’s application. A risk assessment could assume that a multifamily unit has a 25% vacancy rate. An applicant may need to show other cash sources that could cover mortgage payments if the expected rental income falls below 75%.

Single-family vs. multifamily properties

Single-family homes may offer a simplified approach to buying and managing a rental property. Investors may qualify for conventional home loans with a 620 credit score and a 20% down payment. As reported by, however, apartment buildings tend to produce more reliable income streams.

Lenders may consider a multifamily rental unit as a more favorable option due to its higher income potential. Investors could also take advantage of the economies of scale associated with an apartment building’s upkeep and maintenance.

Florida real estate investing offers a range of property types. Investors may qualify for mortgages and then use the rental income to meet their loan obligations.