I have an interesting problem that I’m sure a few other real-estate investors have come across in the past. Being that there are a lot of new investors on this board, I thought maybe everyone could benefit from any insight/advice given. 
Some of you may remember that I recently bought my first investment property. During the purchase, I ran into SEVERAL roadblocks in trying to get my loan approved, until I eventually went with the only option I had left if I wanted to move forward (a family member as a cosigner). It is important to note, that these problems were encountered DESPITE having excellent credit (762 as pulled by the broker), a very steady, Government job with a respectable salary, very little debt (only 13k in student loans and my primary home mortgage-NO credit cards, NO car loans, etc.), and an easy 10-20% down payment available if needed. (they only required 10%).
I was told that basically, due to my income, the bank looked at me as though I was "stretched" to pay the mortgage on my first home, and REALLY stretching to try and take out a loan on a second. They were not interested in the fact that my GF contributed $800 a month towards the bills (she was not on the loan), that another roommate I have contributes $600 to help with the bills, that I had plenty of money in assets if shiit hit the fan (401k, stock account, savings, etc.). All they looked at was my total “on the books†income, and my total monthly expenses.
Now, with the help of said cosigner, I was fortunately able to get that second loan approved, and I am now the proud owner of a second property. My question is this:
HOW on EARTH would I go about financing a third??? I was told that REGARDLESS of my down payment, the banks would not loan to me until either A-my income drastically increased, or B-I could prove a successful year or 2 years history of managing rental property on the new home and the income that came with it. Until then I am stuck. In a nutshell, I was told; The banks would NOT be willing to extend another loan to me for say, a total of $5000 a month in payments, if my reported monthly income is only $3000.
I have enough money saved up where I could easily come up with a 10% down payment on a third property. I even have enough equity in my new second property that I could pull out and put 20% down! But how can I get past the banks stipulations? Are there banks that are offering loans with less then full-documentation (like those “fast & easy†programs for 1st time home buyers), or are they non-existent now? How would I go about getting financed to buy a third property, if the amount of my down payment isn’t even a factor?? To someone one the outside, I can see how it would look like I am stretching to pay 2 mortgages on my salary. They obviously don’t take into consideration that I had renters lined up before I even closed on the second house, supplemental income from a serious GF to help with the bills, etc. HOW can I get around this and pick up another property in the next year? Are there any options?
I guess I’m just looking for tips on how to make the jump into more serious real-estate investing. How did the rest of you get started in terms of financing, and how would you go about it in today’s credit industry.
Any and all help would be appreciated!
Some of you may remember that I recently bought my first investment property. During the purchase, I ran into SEVERAL roadblocks in trying to get my loan approved, until I eventually went with the only option I had left if I wanted to move forward (a family member as a cosigner). It is important to note, that these problems were encountered DESPITE having excellent credit (762 as pulled by the broker), a very steady, Government job with a respectable salary, very little debt (only 13k in student loans and my primary home mortgage-NO credit cards, NO car loans, etc.), and an easy 10-20% down payment available if needed. (they only required 10%).
I was told that basically, due to my income, the bank looked at me as though I was "stretched" to pay the mortgage on my first home, and REALLY stretching to try and take out a loan on a second. They were not interested in the fact that my GF contributed $800 a month towards the bills (she was not on the loan), that another roommate I have contributes $600 to help with the bills, that I had plenty of money in assets if shiit hit the fan (401k, stock account, savings, etc.). All they looked at was my total “on the books†income, and my total monthly expenses.
Now, with the help of said cosigner, I was fortunately able to get that second loan approved, and I am now the proud owner of a second property. My question is this:
HOW on EARTH would I go about financing a third??? I was told that REGARDLESS of my down payment, the banks would not loan to me until either A-my income drastically increased, or B-I could prove a successful year or 2 years history of managing rental property on the new home and the income that came with it. Until then I am stuck. In a nutshell, I was told; The banks would NOT be willing to extend another loan to me for say, a total of $5000 a month in payments, if my reported monthly income is only $3000.
I have enough money saved up where I could easily come up with a 10% down payment on a third property. I even have enough equity in my new second property that I could pull out and put 20% down! But how can I get past the banks stipulations? Are there banks that are offering loans with less then full-documentation (like those “fast & easy†programs for 1st time home buyers), or are they non-existent now? How would I go about getting financed to buy a third property, if the amount of my down payment isn’t even a factor?? To someone one the outside, I can see how it would look like I am stretching to pay 2 mortgages on my salary. They obviously don’t take into consideration that I had renters lined up before I even closed on the second house, supplemental income from a serious GF to help with the bills, etc. HOW can I get around this and pick up another property in the next year? Are there any options?
I guess I’m just looking for tips on how to make the jump into more serious real-estate investing.
How did the rest of you get started in terms of financing, and how would you go about it in today’s credit industry. Any and all help would be appreciated!
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