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

Denham Springs Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? If, by any chance, you have seen a Denham Springs rental property labeled as “unmortgageable,” you may wonder why. In common terms, an unmortgageable property is one for which buyers are unlikely to be able to come by regular financings, such as a mortgage.

In several real estate transactions, that will make completing the sale almost not feasible or impossible. As an investor and Denham Springs property manager, it’s substantial to distinguish what things could cause your property to be unmortgageable so you can stay clear of them. The last thing you want is to be unable to sell or refinance your single-family rental properties given the issues 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 necessary rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will be focused on when thinking over a purchase, and if either is in a sad state, it can make a property unmortgageable. If you’re arranging to sell one of your rental properties, bear in mind to update any old-looking or damaged kitchens and bathrooms previous to putting it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having a bad one. It can be exhausting and totally hard to finance if a property has multiple kitchens – in particular, in a duplex or triplex. This has to do with the fact lenders take into account multiple kitchens as a potential liability, and they may be unwilling to afford a mortgage for such a property. If you’re looking to sell or refinance a rental property with a lot of kitchens, you have to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders characteristically love properties that are in residential areas. It has something to do with the fact that they regard 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 difficult to get financing.
  4. History of Short Leases. It may be exhausting to finance if your rental property has a history of short leases – such as if tenants only stay for six months or a year. This is for the reason that lenders see it as a higher-risk investment. The clear-cut fix is to do everything you can to find longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be demanding 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. It may not make a property openly unmortgageable, but it will quite possibly slow things down.
  6. Natural Hazards. If your rental property is settled in a locale with a history of natural disasters – in particular, in a flood or an earthquake zone – it could surely 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. Sadly, however, there isn’t plenty you can do relating to elements out of your control.
  7. Undesirable Location. If your rental property is discovered in an unappealing area – for illustration, in a high-crime neighborhood or an area with some environmental contamination – it may be tricky to finance. Other issues, like being too close to a landfill or a government land development, can cause problems during a sale.
  8. Very Low Property Values. It could most definitely be difficult to finance your rental property if it’s situated in an area with very low property values – like in a rural area or an economically depressed neighborhood. This is even truer 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 bunch of budget-friendly renovations you can do to increase property values in a short amount of time.
  9. Weak Infrastructure. If your rental property is located in an area with weak infrastructure – particularly, if the roads are in very poor condition or there is a lack of public transportation – it may be too hard to finance. It has something to do with the fact that lenders see weak infrastructure as a manifestation that the area is undesirable, and they may be disinclined to confer a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – to cite an instance, if the foundation is breaking down or needs a new roof or other major repairs – it may be complicated to finance. If the damage is grave or really big, it may make the property completely unmortgageable. The proven practice to find a solution to this is to make sure the property is in good condition before you try to sell it.

After all, is then said and done, consistent property maintenance and even regular simple improvements can help you to elude a lot of negative issues on this list. It is quite important to study your investment properties carefully preliminary to buying any of these with red flags, both now and in the future. Even though no one can anticipate everything that might happen, by employing extensive market evaluations and caring for the properties you own, you can certainly better secure 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 Baton Rouge today.

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