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

Safety Harbor Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? If, in any case, you have checked a Safety Harbor rental property and have been told it is “unmortgageable,” you may certainly think why. In general terms, an unmortgageable property is one for which buyers are unlikely to be able to garner the usual financing, such as an instance a mortgage.

In lots of real estate transactions, that will make completing the sale almost impossible. As an investor and Safety Harbor property manager, it’s super important to understand what things could cause your property to be unmortgageable in such a way as you can keep away from them. The last thing you want is to be unable to sell or refinance your single-family rental properties because of these problems 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 critical rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will give particular attention to when checking a purchase, and if either is in a bad shape, it can make a property unmortgageable. If you’re planning to sell one of your rental properties, always ensure to update any outdated or damaged kitchens and bathrooms just before putting it on the market.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 toilsome to finance if a property has multiple kitchens – like, in a duplex or triplex. This is related to the fact lenders think about multiple kitchens as a potential liability, and they may be unwilling to grant 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 most commonly want properties that are based in residential areas. This has to do with the fact they mark them as a safer investment. If your rental property is too close to commercial property – for illustration, if it’s in a mixed-use development – it may be quite hard to get financing.
  4. History of Short Leases. It may be toilsome to finance if your rental property has a history of short leases – such as 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 applicable fix is to do everything you can to get longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may also be hard to finance your rental property if it has non-standard construction – Such as if it has a steel frame or is a concrete pre-fabricated build. Even as it may not make a property unequivocally unmortgageable, it will indeed slow things down exceedingly.
  6. Natural Hazards. If your rental property is established in a neighborhood with a history of natural disasters – like, a flood or an earthquake zone – it could understandably make mortgage lenders hesitate. The same goes if the property is infested with invasive plants or there is a nearby visible flood or fire damage. Pitifully though, there isn’t a bunch you can do with elements out of your control.
  7. Undesirable Location. If your rental property is built in an unpleasant area – to cite an instance, in a high-crime neighborhood or an area with environmental contaminations – it may be difficult to finance. Other risks or issues, for instance, being too close to a landfill or a government land development, can, over and above that, give rise to problems during a sale.
  8. Very Low Property Values. It could also surely be difficult to finance your rental property if it’s located in an area with very low property values – for example, in a rural area or an economically depressed neighborhood. This applies in particular 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, renovating it will help. There are a good deal 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 instance, if the roads are in disrepair or there is a lack of public transportation – it may be tedious to finance. This has to do with the fact lenders see weak infrastructure as a clear sign that the area is undesirable, and they may be reluctant to offer a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – a case in point, if the foundation is damaged or needs a new roof or other major repairs – it may be a headache to finance. If the damage is big, it may make the property completely unmortgageable. The ideal means to clear this up is to always make sure the property is in good condition before you try to sell it.

In conclusion, consistent property maintenance, and regularly scheduled improvements can be useful to you fend off several obstacles on this list. It is likewise significant to study your investment properties carefully before putting your money on any with these red flags, both now and in the future. Whereas no one can assume to know everything that might happen, by applying comprehensive market evaluations and caring for the properties you own, you can certainly better see to it 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 TradeWinds today.

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