Simple question: When buying a property to flip or invest in such as a rental, how do most people go about financing the purchase? If I already have a home with a mortgage outstanding, the bank will see me as a risk. How do people go about paying both mortgages in between the flip sale or finding responsible tenants to occupy the rental? I hear alot about people buying foreclosures, distressed properties, etc. Where are they getting the money? I would like to purchase these types of properties to invest or flip but it seems like I am the only one that has not inherited millions or won the lottery to do so. Can anybody explain how so many people are able to afford to dabble in real estate?
It depends, If you can pay both mortgages. Lenders specialize in different loan programs. Yes, you can get a loan depending on the lender, your ability to repay. Certain documents are required depending on a lender.
silver I can tell that you do not invest in real estate you are just interested in lending.
JSANT722
Well You have asked a loaded question there are some many ways that you can aquire property with out making two mortgage payments,
One get a loan subject to and have them make a payment for 2-3 months till you sell it , Or if they Have a NOD and you are neg. a short sale then they are not makeing payments anyway, just sell it before you even take title,
Second, I use PI(private investor) that does not get paid until I sell the home thus I don’t have to pay him until the loan funds. I don’t have to make a monthly payments and that eases the cash flow.
Third I use HML that alows me to roll in the hold cost or monthly payments in the loan thus elimateing the monthly cash crunch I usually have my houses sold fairly quickly so that I get to pass the savings on to the end buyer
Fourth I get a conventional loan and in my calucalation before I buy the property I get cash at closing enough for my reserves for my PITIusually 6 mon if I plan on renting it I get 12 mon and agian this helps with the cash flow.
This is not in any particular order it just depends on the home.
Most Lenders will require you to have 6 months PITI reserves before you close the deal.
Jason,
We could do stated income and stated assets and not have to prove 6 month reserves.
If he did not have the reserves.