Buy, rent and finance real estate
Successful acquisition and financing of an investment property
StartHousing regularly helps private individuals and professional real estate investors with the purchase of an investment property. An investment property is a property that is purchased with the aim of renting it out and thereby making a return. In addition to looking for a property, StartHousing also provides guidance on the purchasing process, selecting and screening suitable tenants and taking care of the lease. Optionally, the management of your building can be outsourced to our sister organization 365Management.
How do you finance an investment property?
Many prospective owners of an investment property ask us what steps they need to take to finance their rental property. A house that is purchased with the aim of renting it out for a longer period of time can not be financed with a regular residential mortgage. This requires a real estate mortgage. How does it work?
Providers real estate mortgages in the Netherlands
In the Netherlands, there are currently nine banks that offer real estate mortgages. In addition, there are three real estate finance funds that offer opportunities. Given the interest rates, bank financing is preferred in almost all cases over financing with a property finance fund. Of the nine banks that can be chosen, seven are mainly active in the financing segment from € 750,000 and higher. Two Dutch banks are active in the segment below. Real estate mortgages can be closed from € 75,000 onwards.
Standards of real estate mortgage
• In general, the norms for obtaining a real estate mortgage are as follows:
• To obtain a real estate mortgage, it is necessary to make a separate valuation of the property. The valuation must show the (future) value in the rented state. That means: the value that the property has when the tenants are in it. The value in rented condition depends strongly on the level of the rental income that is generated and may deviate from the sales value that the property has if it is not rented out.
• A minimum income requirement of € 45,000 gross on an annual basis applies to one of the real estate banks. In principle, the other banks are not tested for income.
• At most real estate banks, a maximum of 70 to 80% of the value in the rented state is financed. This means that you have to bring in 20 to 30% of your own capital and the additional costs for the purchase yourself.
• When obtaining a real estate mortgage it is considered desirable by banks that you make at least 25% profit on your monthly costs with the rental income.
• A real estate mortgage can be arranged in 3 to 5 weeks, provided that the valuation report is available and the application is submitted perfectly and completely to the right real estate bank in one go. (You can be taken care of in that.)
Build a real estate portfolio
The financing product is focused on facilitating the growth of your portfolio. Real estate banks prefer clients who want to build up a small or medium-sized portfolio with investment properties in the future. If after some years you have repaid a part of your financing, your property may have increased in value or your rental income has increased, it is often possible to have the property valued again and from the surplus value receive additional financing to make capital available. for the purchase of a next investment property.
Calculate real estate financing
You can use the simple calculation module at www.financiering-regelen.nl to calculate your real estate mortgage and discover where the possibilities lie for you. The calculation makes it completely transparent how your financing can be and what the return on your future investment property will be.
If you would like to know more about purchasing, financing and renting an investment property, we will gladly help you further.