Long Term Rental Loans | Think real estate


How to determine if this type of loan is right for you

One of the most important aspects when it comes to real estate investments is choosing the right loan program for yourself and for the property. Each lender will offer several programs, so it is essential to navigate through the different options and choose the right one. Don’t be afraid to ask a representative of the lender of your choice. They should have a lot of product information and will answer any questions about the guidelines or requirements for each of the different loan programs.

At RCN in particular, the loan program that has seen the greatest increase in popularity over the past year is the long-term rental loan. Typically a 30 year long term rental loan program is the best option for real estate investors looking for passive income. With long-term rentals, there are many factors that will work in the investor’s favor and make the loan program more attractive. The property must be ready to be rented out and the interest rate for that particular program will be the lowest of any program offered by a lender or bank. Having this lowest interest rate for the longest period makes the long term rental loan very attractive. Currently at RCN Capital, the interest rate is 3.49%.

However, you still need to make sure that this specific loan is right for you. Just because it has the lowest interest rate for the longest period doesn’t mean it’s always the best for you and your investment plans.

As mentioned earlier, the 30 year loan program is usually a scenario where the lender will not allocate any rehab funds. On a long term loan, having this property ready to be rented out to tenants is a big plus for the lender and minimizes the risk on their end. If, as an investor, you know your ultimate plans are to renovate the property and make a real profit, the long-term rental loan might not be right for you initially. On the flip side, one of the most popular times to take out a long term loan is to refinance after a fix and flip loan is over. This way, you have increased the value of the home through renovations and the amount you can charge for rent. With the security of a 30-year loan and the value of a better property, many borrowers will buy the property, do the necessary rehabilitation, and then take out the long-term loan when they do.

Another thing to consider with some lenders when determining if the long term loan is right for you is the length of time you want to keep the property. On long term loans, a pre-penalty penalty may come into play. This may differ from lender to lender, but for RCN Capital, the prepayment penalty period is for the first five years of the loan. 30 years old. This will only happen if you want to get rid of the property within the first five years of taking out a loan. Make sure the long term rental loan is what you want in order to avoid paying unnecessary fees and losing an opportunity to make money. There are always alternatives such as short term rental and the fix and flip loan product. There is no doubt that there are advantages to long term rental, but it is also a big commitment. If you are ready to hold the property and rent it out that serves as passive income, then long term rental is right for you.

For long-term rentals, following the guidelines necessary to qualify for the loan will also let you know if the long-term loan is right for you. Some lenders must have experience and a minimum FICO score. As an investor, it is therefore important to keep an eye on the number at all times in order to be sure that you qualify. There are a few things that you can save a lot of time knowing about when it is worth applying and when not. At RCN Capital, for properties of 1 to 4 units, the minimum FICO score is 620, but if you are looking for a long term rental loan on a multi-family property (5 units and more) you will need a score FICO of at least 680. A partner can be brought in with a FICO score that meets these minimum requirements if you don’t do it yourself, but they will need to sign the loan and be a co-guarantor.

One of the last important aspects in determining if a long term rental loan is right for you is deciding what type of investor you want to be. There are two main choices because you can go the short term route with fix and flips and make money quickly after the renovation by putting it back on the market or you can be more of a landlord, be invested in tenants and tenants. relationships with them while accumulating passive income over a long period of time. If you prefer the latter to a long-term rental loan, this would be a strategy that will suit you perfectly. Acting as a landlord and making sure that all of your units have tenants, and that tenants are filled as needed, is part of the long-term rental strategy. It is less labor-intensive, but there is still work to be done for these rental properties.

Long-term rental properties have many advantages, but it is essential that investors do their due diligence and find out if the long-term loan is right for them. For any questions about long-term rental loans or any general questions about real estate investing, do not hesitate to contact RCN Capital!


Nate Zielinski, Junior Business Development Coordinator, joined RCN Capital in 2020. He adds his ambition, communication skills, teamwork and public speaking ability to the business development team at RCN. Nate’s goal will be to recruit new, lasting business relationships with brokers and borrowers as well as maintain the strong relationships RCN Capital already has in place. Nate’s previous work experience includes sales, advertising, writing, and social media. Nate graduated from the University of Connecticut in 2015 with a journalism degree.


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