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

Rochester Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? When you get a glimpse of a Rochester rental property thought “unmortgageable,” you may look into why. In rather simple terms, an unmortgageable property is one for which buyers are unlikely to be able to achieve general financing, for instance, a mortgage.

In some real estate transactions, that will make completing the sale almost unachievable. As an investor and Rochester property manager, it’s salient to know and understand what things could cause your property to be unmortgageable so this way you can prevent them. The last thing you want is to be unsuited to sell or refinance your single-family rental properties originating from disputes 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 pertinent rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will focus on when assessing a purchase, and if either is in bad form, it can make a property unmortgageable. If you’re coordinating to sell one of your rental properties, ascertain to update any old or damaged kitchens and bathrooms preparatory to putting it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having an ineffective one. It can be taxing to finance if a property has multiple kitchens – by way of example, in a duplex or triplex. This is for the reason that lenders think of multiple kitchens as a potential liability, and they may be not eager to tender a mortgage for such a property. If you’re looking to sell or refinance a rental property with several kitchens, you have to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders normally accept properties that are set in residential areas. This is for the reason that they identify them as a safer investment. If your rental property is too close to commercial property – for instance, if it’s in a mixed-use development – it may be rather difficult to get financing.
  4. History of Short Leases. It may be taxing to finance if your rental property has a history of short leases – for instance if tenants only stay for six months or a year. It has something to do with the fact that lenders see it as a higher-risk investment. The outright fix to this is to do everything you can to obtain longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be laborious and difficult to finance your rental property if it has non-standard construction – in particular if it has a steel frame or is a concrete pre-fabricated build. While, indeed, it may not make a property completely unmortgageable, it will most likely slow things down greatly.
  6. Natural Hazards. If your rental property is positioned in a vicinity with a history of natural disasters – by way of example, in a flood or an earthquake zone – it perhaps could make mortgage lenders hesitate. The same is true if the property is infested with invasive plants or there is a nearby visible flood or fire damage. Woefully, there isn’t so much you can do toward elements out of your control.
  7. Undesirable Location. If your rental property is settled in an unattractive area – for instance, in a high-crime neighborhood or an area with innumerable environmental contamination – it may be a pain to finance. Other conflicts, for instance being too close to a landfill or a government land development, can, in addition, lead to problems during a sale.
  8. Very Low Property Values. It is difficult to finance your rental property if it’s based in an area with very low property values – such as, in a rural area or an economically depressed neighborhood. It 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, rectifying it by renovation will certainly help. There are particular budget-friendly renovations you can do to enable an increase in property values in a short amount of time.
  9. Weak Infrastructure. If your rental property is located in an area with weak infrastructure – to cite an instance, if the roads are in a lamentable state or there is a lack of public transportation – it may be hard to finance. This is for the reason that lenders see weak infrastructure as a mark that the area is undesirable, and they may be unwilling to offer a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – as an illustration, if the foundation is falling into disrepair or needs a new roof or other major repairs – it may be burdensome to finance. If the damage is massive, it may make the property completely unmortgageable. The best way to work on this is to ensure the property is in good condition before you try to sell it.

Conclusively, consistent property maintenance and regular, general improvements can be advantageous to you by allowing you to shun various issues on this list. It is specifically important to study your investment properties carefully just before making a purchase of any with these red flags, both now and in the future. Granting that no one can surely see everything that might happen, by executing complete market evaluations and caring for the properties you own, you really can better make sure 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 Seacoast New Hampshire today.

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