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10 Things That Make a Property Unmortgageable (and How to Avoid Them)

Trinidad Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? Assuming you have detected a Trinidad rental property perceived as “unmortgageable,” you may take into consideration why. In plain terms, an unmortgageable property is one for which buyers are unlikely to be able to acquire customary financing, for an instance, a mortgage.

In a lot of real estate transactions, that will make completing the sale almost impossible. As an investor and Trinidad property manager, it’s very important to grasp well what things could cause your property to be unmortgageable so that you can watch out for them. The last thing you want is to be unfit and unable to sell or refinance your single-family rental properties for issues that make them unmortgageable.

To get the most out of your investments, here are ten things that could make your property unmortgageable and how to avoid them.

  1. Unusable Kitchen or Bathroom. One of the significant rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will aim at when taking into account a purchase, and if either is appalling, it can make a property unmortgageable. If you’re reckoning to sell one of your rental properties, be certain to update any worn-out or damaged kitchens and bathrooms before ever putting it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having a good-for-nothing one. It can be burdensome to finance if a property has multiple kitchens – case in point, in a duplex or triplex. This happens because lenders find multiple kitchens as a potential liability, and they may be unwilling to give a mortgage for such a property. If you’re looking to sell or refinance a rental property with numerous kitchens, you may indeed have to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders mostly settle upon properties that are established in residential areas. This happens because they think of them as a safer investment. If your rental property is too close to commercial property – for example, if it’s in a mixed-use development – it may be toilsome to get financing.
  4. History of Short Leases. It may be burdensome to finance if your rental property has a history of short leases – for example if tenants only stay for six months or a year. That is because lenders see it as a higher-risk investment. The fix for this is to do everything you can to procure longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be taxing to finance your rental property if it has non-standard construction – for instance, if it has a steel frame or is a concrete pre-fabricated build. Although it may not make a property unmortgageable, it will possibly slow things down greatly.
  6. Natural Hazards. If your rental property is based in a location with a history of natural disasters – case in point, in a flood or an earthquake zone – it may make mortgage lenders hesitate. This also applies if the property is infested with invasive plants or there is a nearby visible flood or fire damage. Sadly, though, there isn’t quite a lot you can do about elements out of your control.
  7. Undesirable Location. If your rental property is situated in an unpleasant area – for instance, in a high-crime neighborhood or an area with different environmental contamination – it may be hard to finance. Other problems, for instance being too close to a landfill or a government land development, can result in problems during a sale.
  8. Very Low Property Values. It might be difficult to finance your rental property if it’s set in an area with very low property values – in particular, in a rural area or an economically depressed neighborhood. This is even more so if the property has liens close to or over the property’s current value. If the property’s condition has caused property values to go down, correcting it will help. There are numerous budget-friendly renovations you can do to assist increase property values in a short amount of time.
  9. Weak Infrastructure. If your rental property is located in an area with weak infrastructures – such as, if the roads are in a dreadful state or there is a lack of public transportation – it may be toilsome to finance. This happens because lenders see weak infrastructure as an indicator that the area is undesirable, and they may be quite unwilling to risk giving a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – for instance, if the foundation is shaky or needs a new roof or other major repairs – it may be unmanageable or quite difficult to finance. If the damage is huge, it may make the property completely unmortgageable. The ideal practice to rectify this is to be certain the property is in good condition before you try to sell it.

What it all comes down to, is consistent property maintenance and regular customary improvements can help you to stave off almost all troubles on this list. It is equally great to study your investment properties carefully before purchasing any with red flags, both now and in the future. Though conceding no one can foresee everything that might happen, by bringing about comprehensive market evaluations and caring for the properties you own, you can better secure that you reap the rewards of your investments when the time is right.

 

If you’d like to learn more about how to optimize your investment properties, contact Real Property Management DC Metro today.

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