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

West Valley City Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? Whenever you have come across a West Valley City rental property reputed to be “unmortgageable,” you may stop to ask why. In common terms, an unmortgageable property is one for which buyers are unlikely to be able to get traditional financing, in particular, a mortgage.

A large number of real estate transactions will make completing the sale almost unfeasible and impossible. As an investor and West Valley City property manager, it’s imperative to assimilate and understand what things could cause your property to be unmortgageable so you can easily avoid them. The last thing you want is to not be able to sell or refinance your single-family rental properties due to factors 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 integral rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will stress when looking to purchase, and if either is in a bad state, it can make a property unmortgageable. If you’re arranging to sell one of your rental properties, secure to update any old-fashioned or damaged kitchens and bathrooms before ever deciding of putting it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having an impractical one. It can be a pain to finance if a property has multiple kitchens – for an instance, in a duplex or triplex. This has to do with the fact lenders regard multiple kitchens as a potential liability, and they may be indisposed to offer a mortgage for such a property. If you’re looking to sell or refinance a rental property with several kitchens, you may have to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders commonly elect properties that are located in residential areas. This has to do with the fact they take them into account as a safer investment. If your rental property is too close to commercial property – specifically, if it’s in a mixed-use development – it may be arduous to get financing.
  4. History of Short Leases. It may be a pain to finance if your rental property has a history of short leases – for instance if tenants only stay for six months or a year. The fact of the matter is that lenders see it as a higher-risk investment. The direct fix is to do everything you can to find longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be stressful to finance your rental property if it has non-standard construction – take one example if it has a steel frame or is a concrete pre-fabricated build. Even though it may not make a property unmortgageable, it will conceivably slow things down greatly.
  6. Natural Hazards. If your rental property is settled in a locale with a history of natural disasters – for instance, in a flood or an earthquake zone – it could certainly make mortgage lenders hesitate. The same also applies if the property is infested with invasive plants or there is a nearby visible flood or fire damage. Disappointingly, there aren’t many things you can do on the subject of elements out of your control.
  7. Undesirable Location. If your rental property is located in an unpleasant area – in particular, in a high-crime neighborhood or an area with plenty of environmental contamination – it may be difficult to finance. Other issues, in particular, being too close to a landfill or a government land development, can secondly cause problems during a sale.
  8. Very Low Property Values. It is seemingly difficult to finance your rental property if it’s situated in an area with very low property values – for illustration, in a rural area or an economically depressed neighborhood. This is particularly true 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, refurbishing it will help. There are a lot of budget-friendly renovations you can do to help increase property values in a short amount of time.
  9. Weak Infrastructure. If your rental property is located in an area with weak infrastructure – for example, if the roads are in a terrible state or there is a lack of public transportation – it may be arduous to finance. This has to do with the fact lenders see weak infrastructure as a forewarning that the area is undesirable, and they may be hesitant to give a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – like, if the foundation is decrepit or needs a new roof or other major repairs – it may be hard to finance. If the damage is critical, it may make the property completely unmortgageable. The best solution to mend this is to ensure the property is in good condition before you try to sell it.

In the long run, consistent property maintenance and proper regular improvements can get you to successfully avoid a bunch of issues on this list. It is, over and above that, salient to study your investment properties carefully before deciding to invest in any with these red flags, both now and in the future. Notwithstanding that no one can anticipate everything that might happen, by accomplishing complete market evaluations and caring for the properties you own, you can better ensure 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 Wasatch today.

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