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

Willow Springs Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? Supposing you have spotted a Willow Springs rental property considered “unmortgageable,” you may think why. In plain terms, an unmortgageable property is one for which buyers are unlikely to be able to obtain the usual financing, namely a mortgage.

In all real estate transactions, that will make completing the sale almost impossible. As an investor and Willow Springs property manager, it’s vital to grasp what things could cause your property to be unmortgageable in such a way that you can steer clear of them. The last thing you want is to be incapable of selling or refinancing your single-family rental properties because of 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 most important rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will concentrate on when thinking about a purchase, and if either is in bad condition, it can make a property unmortgageable. If you’re preparing to sell one of your rental properties, make it a point to update any obsolete or damaged kitchens and bathrooms before putting it on the market.
  2. Too Many Kitchens. In some cases, having too many kitchens can be just as bad as having a useless one. It can be stressful to finance if a property has multiple kitchens – for instance, in a duplex or triplex. This is because lenders perceive multiple kitchens as a potential liability, and they may be disinclined to provide a mortgage for such a property. If you’re looking to sell or refinance a rental property with various kitchens, you have to find a cash buyer or look for a specialty lender.
  3. Too Close to Commercial Property. Lenders frequently select properties that are situated in residential areas. The reason for this is that they deem them as a safer investment. If your rental property is too close to commercial property – take one example, if it’s in a mixed-use development – it may be hard to get financing.
  4. History of Short Leases. It may be stressful to finance if your rental property has a history of short leases – like if tenants only stay for six months or a year. This is because of the fact that lenders see it as a higher-risk investment. The straightforward fix is to do everything you can to have longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be grueling to finance your rental property if it has non-standard construction – for illustration, if it has a steel frame or is a concrete pre-fabricated build. Although it may not make a property unmortgageable, it will probably slow things down greatly.
  6. Natural Hazards. If your rental property is built on a site with a history of natural disasters – for instance, in a flood or an earthquake zone – it perhaps can make mortgage lenders hesitate. The same applies if the property is infested with invasive plants or there is a nearby visible flood or fire damage. Regrettably, there isn’t anything you can do with elements out of your control.
  7. Undesirable Location. If your rental property is found in an unwanted area – such as, in a high-crime neighborhood or an area with many environmental contaminations – it may be burdensome to finance. Other concerns, namely being too close to a landfill or a government land development can similarly bring about problems during a sale.
  8. Very Low Property Values. It perhaps can be difficult to finance your rental property if it’s in an area with very low property values – for example, in a rural area or an economically depressed neighborhood. This applies especially 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, repairing it will help. You can do many budget-friendly renovations 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 – for example, if the roads are in a poor state or there is a lack of public transportation – it may be hard to finance. The reason for this is that lenders see weak infrastructure as an indication that the area is undesirable, and they may not be willing to offer a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – such as, if the foundation is dilapidated or needs a new roof or other major repairs – it may be a pain to finance. If the damage is grave, it may make the property completely unmortgageable. The effective way to solve this is to make it a point the property is in good condition before you try to sell it.

In the end, consistent property maintenance and regular improvements can assist you to suppress multiple risks on this list. It is likewise relevant to study your investment properties carefully before obtaining any of these red flags, both now and in the future. Despite the that no one can anticipate everything that might happen, by accomplishing an exhaustive market evaluation and caring for the properties you own, you can better make certain 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 Excellence today.

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