How Much Down Payment is Required to Buy a Rental or Investment Property in Santa Maria?

Santa Maria Rental Home Buyer Alert:  How Much Down Payment is required to buy a Rental or Investment Property in Santa Maria?

        

Townhome in Gated Arborwalk Community in Santa Maria CA

Townhome in Gated Arborwalk Community in Santa Maria CA

Many investors that I am currently working with in the Santa Maria and Lompoc real estate market are paying all cash for their rental homes.  That is why the market for foreclosures is so difficult for Santa Maria home buyers using FHA/VA financing; it is difficult to compete against a cash offer on a foreclosure where the bank wants to make no repairs to the property.  That is because in the face of an uncertain stock market and low interest returns on CDs and savings accounts, many are turning back to real estate as an investment.  Home prices have come back into reality, and rents overall for this area have remained high compared to incomes.  So, buying a cheap foreclosure and fixing it up into a rental is an option many are exploring.  However, some investors still prefer to leverage by getting a loan.  Gone are the days when 5% or 10% down would purchase a rental property.  We are not yet back up to the requirement of 30% down payments on rentals, but we are close.  Investors applying are reporting that 20% down is required for financing and that they get offers of a lower interest rate if they increase that amount to 25% or 30%.

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