Facebook Pixel

While inflation and mortgage rates are cooling off after a rough 2023, many investors are taking stock of their situation. Investment property mortgage rates tend to be higher than typical mortgage rates, so investors are used to paying more, but many are still unsure whether to hold onto their properties.

Gone are the days of easy money from sky-high house prices. Inflation and mortgage rates are starting to come back down, but they are still a little shaky. While property owners won’t get as much from selling as they would have a couple of years ago, is it still worth holding onto an investment property in unstable conditions?

Many hope that inflation will return to a normal 2% soon, but there is still some uncertainty about how 2024 will shake out. So, is it a good time to sell your investment property? Let’s take a look.

Investment Property Mortgage Rates

Investment property mortgages typically come with more restrictions than typical mortgages. These mortgages require at least a 20% down payment to access good investment property mortgage rates. You also need a good credit score and a stable income. However, you do not need to reside in the property for a portion of the year.

To qualify for an investment property mortgage, you need to provide:

  • An agreement of purchase and sale
  • Proof of steady income (pay stubs, Notice of Assessment)
  • Zoning documentation that proves you’re purchasing a residential property
  • Proof of down payment
  • Proof of existing rental income or potential rental income

While investment property mortgage rates are likely to be slightly higher than usual rates, they shouldn’t be the primary reason for selling.

Investment Properties are a Long-Game

There’s a reason why real estate investment is so popular: it pays off — eventually. Real estate investment is a long game. Regardless of market fluctuations, housing prices always seem to go up over the long term.

While you may not be selling at record prices any time soon, there will always be a demand for property. Population growth will ensure that. Many investors agree that, if you can, it’s always best to hold onto your investment property as long as you can. You will almost always make a profit.

When Things Get Tight

Are you feeling financially stressed? You’re not alone. As financial pressure mounts, it can be tempting to look at your investment property as a great way to provide some extra cash. However, most experts agree that selling your investment property should be a last resort.

A good idea is to write down all your property expenses, like maintenance, taxes and utilities and compare them to your other expenses. Are they really the cause of your financial stress or is it something else? We recommend finding ways to cut other costs while holding onto your investment property if possible.

Take Control of Your Debt

If your expenses are truly unmanageable, consider consolidating your debts with a loan. A second mortgage or a home equity line of credit are great options to get your debt under control.

Debt consolidation can be a huge help, with many finding a single payment more manageable than keeping track of several. Many people even find their credit scores improve after debt consolidation as well.

Consider Restructuring

While everyone agrees that real estate will go up in value in the long term, it still doesn’t help your current situation.

If you’re in a bumpy financial situation, consider re-amortizing. If you have a 20-year mortgage, re-amortize to 30. The longer amortization period means reduced monthly payments, helping reduce expenses.

If your mortgage is coming up for renewal, consider refinancing and lock into a shorter term until rates calm down. Rates are already beginning to cool off, so this is a good option right now. You will also avoid getting locked in at a higher rate for a long time if rates continue to fall.

When to Sell an Investment Property

As investment property mortgage rates cool down, you may not need to sell. However, mortgage rates aren’t the only factor to consider when selling your property. If you are over-leveraged and having sleepless nights, it may be time to sell.

If you have no options for consolidation or refinancing and are struggling to make payments, then you need to sell. Owning an investment property shouldn’t negatively affect your mental health. However, we always recommend exploring all other options before selling.

HW Advantage: Investment Property Mortgage Rates

If you own an investment property and are looking to refinance it or get into real estate investment, reach out to HW Advantage. Our relationships with over 35 qualified lenders give us the best investment property mortgage rates available. We pride ourselves on being able to provide flexible mortgages for our Burlington-area community.

Regardless of your financial situation, HW Advantage can help you land the house of your dreams. Ready to see how we can help you achieve your dreams? Contact us today or apply directly for a mortgage online.

Be sure to follow us on Facebook, LinkedIn, and Instagram.