If a property rental company, essentially a corporate landlord, is looking to acquire homes to rent out on mortgage, would the company take out a personal mortgage or a commercial mortgage, or is there a third type of mortgage just for this situation?

  • What the mortgage is and what the property is are two different things. – Victor Jun 20 '18 at 2:19

Companies by definition can't take out personal mortgages. They have to take out a commercial mortgage, or other business loan.

  • This question and your answer by the way also stray into business finance. – sudonym Jun 24 '18 at 3:13

A residential property would still be a residential property even if a corporation owns it.

A corporation can not get a personal mortgage or loan but would need to get a business loan to buy the residential property.

  • So even though the property would be classified as a residential property, the company would seek a commercial mortgage? – TheEnvironmentalist Jun 20 '18 at 2:31
  • Is the company an individual? – Victor Jun 20 '18 at 2:43
  • The company is an LLC with the intention of holding multiple properties – TheEnvironmentalist Jun 20 '18 at 3:07
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    @TheEnvironmentalist - so why would the company be able to get a loan meant for individuals? A company might borrow to buy furniture - tables and chairs, a lounge and TVs, do they take out a personal loan for that or a business loan? – Victor Jun 20 '18 at 3:42

If an individual person takes out a loan for residential rental property, they will generally have to meet different requirements regarding down payment. But they will be evaluated based on personal income, personal credit history, and how likely they are to get a renter at the monthly rent need to service the loan.

Once they become a company or they have multiple residential rental properties they will no longer be applying with the part of the bank that handles loans to individuals, they will be dealing with the part of the bank that makes loans to businesses. The will be looking at a different set of numbers: they will be looking at the financials of the business.

Now if the rental property isn't a single residence (single family home, town home, condo) but is either a commercial property, industrial property, or multi family dwelling (an apartment building) they will have have to get a commercial loan. Loans for these types of properties are not made like a regular mortgage to a homeowner.

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