Try to make a decision prior to financing regarding your hold time for the model home investment. If you are planning on selling the home at the end of the lease, then most Investors will tell you to go with as little down payment as possible. If you are a long-term Investor, you should consider 20-30% depending on the market. In Texas, you can actually buy a model home and have it cash flow with just 20% down while the builder is renting. After the builder has ended the lease, the models typically cash flow with 25-30% down. Markets do vary but you get the picture. There are many lenders that will not finance a model home so ask the question of your lender very early. We have access to lenders that are model home friendly. Rates are no different than any investment purchase. This type of loan does not fit in the very tight and narrow box for some lender portfolios even though it is less risky than a typical empty rental home purchase. Go figure!
