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

Kingfisher Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? When you have discovered a Kingfisher rental property considered “unmortgageable,” you may certainly wonder why. In broad terms, an unmortgageable property is one for which buyers are unlikely to be able to find regular financing, such as a mortgage.

In many real estate transactions, that will make completing the sale almost possible. As an investor and Kingfisher property manager, it’s significant to glean what things could cause your property to be unmortgageable so this way, you can stay away from them. The last thing you want is to be sadly unable to sell or refinance your single-family rental properties due to 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 foremost rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will give emphasis to when thinking about purchasing, and if either is in ill shape, it can make a property unmortgageable. If you’re proposing to sell one of your rental properties, completely make sure to update any old-fashioned or damaged kitchens and bathrooms before trying to put it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having an unusable one. It can be hard to finance if a property has multiple kitchens – as an illustration, in a duplex or triplex. The fact of the matter is that lenders see multiple kitchens as a potential liability, and they may be unwilling to offer a mortgage for such a property. If you’re looking to sell or refinance a rental property with various kitchens, you ought to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders typically choose properties that are found in residential areas. This is for the reason that they determine them as a safer investment. If your rental property is too close to commercial property – such as, if it’s in a mixed-use development – it may be demanding to get financing.
  4. History of Short Leases. It may be hard to finance if your rental property has a history of short leases. It has something to do with the fact that if tenants only stay for six months or a year, as a result, lenders see it as a higher-risk investment. The notable fix is to do everything you can to garner longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be a pain to finance your rental property if it has non-standard construction – to cite an instance if it has a steel frame or is a concrete pre-fabricated build. Supposing it may not make a property downright unmortgageable, it will certainly slow things down a whole lot.
  6. Natural Hazards. If your rental property is in a place with a history of natural disasters – as an illustration, in a flood or an earthquake zone – it perhaps could make mortgage lenders hesitate. This is also true if the property is infested with invasive plants or there is a nearby visible flood or fire damage. But sad to say, there isn’t much you can do concerning elements out of your control.
  7. Undesirable Location. If your rental property is located in a dreadful area – such as, in a high-crime neighborhood or an area with quite a lot of environmental contamination – it may be toilsome to get financing. Other issues, like being too close to a landfill or a government land development, can result in problems during a sale.
  8. Very Low Property Values. It is most certainly difficult to finance your rental property if it’s placed in an area with very low property values – by way of illustration, in a rural area or an economically depressed neighborhood. This applies especially 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, organizing a renovation right up will help. There are various budget-friendly renovations you can do to foster increased property values in a short amount of time.
  9. Weak Infrastructure. If your rental property is located in an area with weak infrastructure – for instance, if the roads are in a very poor state or there is a lack of public transportation – it may be difficult to finance. This is for the reason that lenders see weak infrastructure as a clear indication that the area is undesirable, and they may be uncaring to grant a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – particularly, if the foundation is notably damaged or needs a new roof or other major repairs – it may be arduous to finance. If the damage is vast, it may make the property completely unmortgageable. The reliable method to set this right is to completely make sure the property is in good condition before you try to sell it.

In the final analysis, consistent property maintenance and regular improvements can help you effectively avoid the issues on this list. It is moreover imperative to study your investment properties carefully before thinking of buying any with these red flags, both now and in the future. Conceding that no one can foresee everything that might happen, by endeavoring to utilize complete market evaluations and caring for the properties you own, you can better establish 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 Elevate today.


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