Skip to Content

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

Culver City Rental Property in Front of a WildfireWhat makes a property unmortgageable – and what does that mean? If by any chance you have spotted a Culver City rental property labeled as “unmortgageable,” you may certainly wonder why. In plain terms, an unmortgageable property is one for which buyers are unlikely to be able to obtain ordinary financing, for example, a mortgage.

A vast number of real estate transactions will make completing the sale unlikely and almost impossible. As an investor and Culver City property manager, it’s focal to consider what things could cause your property to be unmortgageable so that you can dodge them. The last thing you want is to be incapable of selling or refinancing your single-family rental properties because of negative characteristics 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 major rooms in any home is the kitchen. The same can be said for the bathroom. These are two rooms that potential homebuyers will pay close attention to when taking into consideration a purchase, and if either is in a dreadful state, it can make a property unmortgageable. If you’re preparing to sell one of your rental properties, make certain to update any out-of-fashion 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 an impractical one. It can be demanding to finance if a property has multiple kitchens – such as, in a duplex or triplex. This is because lenders deem multiple kitchens as a potential liability, and they may be hesitant to give a mortgage for such a property. If you’re looking to sell or refinance a rental property with multiple kitchens, you may consider finding a cash buyer or looking for a specialty lender.
  3. Too Close to Commercial Property. Lenders, in general, favor properties that are situated in residential areas. This is because they perceive them as a safer investment. If your rental property is too close to commercial property – as an illustration, if it’s in a mixed-use development – it may be complicated to get financing.
  4. History of Short Leases. It may be demanding 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 related to the fact lenders see it as a higher-risk investment. The blatant, clear fix is to do everything you can to have longer leases and encourage tenants to stay.
  5. Non-Standard Construction. It may be arduous to finance your rental property if it has non-standard construction – like if it has a steel frame or is a concrete pre-fabricated build. Despite that it may not make a property straightforwardly unmortgageable, it will probably slow things down significantly.
  6. Natural Hazards. If your rental property is built on a site with a history of natural disasters – such as a flood or an earthquake zone – it could most certainly 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. Lamentably, there isn’t much you can do related to elements out of your control.
  7. Undesirable Location. If your rental property is found in an abhorrent or even just unpleasant area – for example, in a high-crime neighborhood or an area with lots of environmental contamination – it may be tedious to finance. Other objections, for example being too close to a landfill or a government land development, can moreover bring about problems during a sale.
  8. Very Low Property Values. It may be difficult to finance your rental property if it’s in an area with very low property values – particularly, in a rural area or an economically depressed neighborhood. It is even more so 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, restoring it will help. There are multiple budget-friendly renovations you can do to get you 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 – specifically, if the roads are in a pitiful state or there is a lack of public transportation – it may be complicated to finance. This is due to lenders seeing weak infrastructure as an obvious sign that the area is undesirable, and they may resist lending a mortgage for such a property.
  10. Significant Damage. If your rental property has significant damage – by way of illustration, if the foundation is ruined or needs a new roof or other major repairs – it may be exhausting to finance. If the damage is crucial, it may make the property completely unmortgageable. The efficient way to confront this is to make certain the property is in good condition before you try to sell it.

In conclusion, consistent property maintenance and regular, ordinary improvements can help you to keep off lots of complexities on this list. It is indeed very important to study your investment properties carefully before ever putting money into any with these red flags, both now and in the future. Although no one can anticipate everything that might happen, by doing exhaustive market evaluations and caring for the properties you own, you can 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 California Coast today.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details