How difficult is it to buy a home as an investment?

As you may have discovered, one of the universal complaints about Santa Rosa is that it costs too much to buy a house. The unspoken preface to that comment is that this is an extremely beautiful, accommodating area where many people dream of living.

Perhaps you acquired part of the dream when you bought your own home. Now, you are considering the possibility of purchasing an investment home that you intend to lease to others. You ask, is obtaining an investment property mortgage different than buying a primary dwelling?

An investment purchase has heightened requirements

Many of the documents, disclosures and legal formalities surrounding the purchase of investment property are similar to those you encountered when you bought your home. There are, however, some differences:

  • Lenders want you to possess a higher credit score than was necessary for a primary dwelling
  • Lenders want you to demonstrate a qualifying debt-to-income ratio
  • Lenders want you to possess a verifiable two-year work history

This is seen as a good time to buy an investment home

The Santa Rosa/Petaluma area is not only an ideal spot to attract potential leasers but has some important distinctions as well. While recent home prices rose in some areas by about 6% a year, in Santa Rosa the increase was 2%. In addition, the percentage of leasers is smaller in this area—less than 40% compared to over 60% in San Francisco. Also, home mortgage rates remain well below 3%.

There are heightened requirements for purchasing an investment home. However, there may not be a better time than now or a better location than Santa Rosa.