Financing multiple rental properties

Greetings fellow investors,

I am in the process of purchasing my first rental property. (Three family, owner occupied.)

I would like to hear about how others got the ball rolling with financing their first few properties… I was told the first few are the most difficult but once you get going you can find the money.

My goal is to buy as many properties as possible by using as little of my cash as possible.

This first deal I am going FHA- owner occupied and may even do a 203K rehab loan if I find the right deal.

I was thinking if I buy cheap enough, rehab and refi conventional I could get another FHA loan and avoid the %20 down for the next deal…

ALSO, Every bank is telling me I need 2 years of rental history before I can qualify for an “investment loan”. (NON owner occupied.) THIS SUCKS! :banghead

Two years is a long time… Any way around this? Portfolio lenders perhaps? Maybe jump owner occupied into each one???

Any guidance would be greatly appreciated.

normally they will give you credit for 75% of the rent toward PITI on that property until you hit the 2 year mark on that property, then go by the tax records (you have enough history on that property to show a history of what expenses will be)

I am assuming you are going to live in the property since it is an owner occupied loan,

You can use a hard money loan to buy/rehab the property, then convert to conventional financing, it cost you some money (points and high interest during the hard money loan), but you will end up with much less cash in the deal

Most of the lending restrictions you hear about are for Gov insured Fannie & Freddie loans. For investment properties you may be best off to talk with local banks and credit unions about in-house commercial loans. You may be surprised how flexible some of the local lenders can be. I know my local credit union has been very friendly to me.

Just FYI, many credit unions avoid “commercial loans” I know that is the case with most of them around me. So a quick way to weed them out is just call them and ask if they have a commercial loan officer. Most will not, but the ones that do will be your friends.


Talk to your LOCAL (not national) bank.
The first one will be easy, since you are planning on living there and it’s below 4-family.

My Bank wanted me to be in business for 2 years before they would count 75% of my rents as income, but since I have another job and other income, that wasn’t an issue.


I will certainly sit down with a local bank and explain my goals. I want to have this first property up and running before I do anything else. I’m thinking since I will have the rental income on my taxes this year that would be SOME experience… Better than nothing I guess? Plus I have cash, perfect credit and no debt. They better work with me! :evil

From there I’m wondering how I can get around the %20 down for the second place… What are the options? Private money, another owner occupied loan, rehab and refi?

Anyone get around the 12 month rule before doing a cash out refi??? Can you refi for %80 of the purchase price and then get full value later??? A HML for a year would be a killer.

I like to hold onto my capital for emergencies and putting %20 down each time would have me broke quick.

if your buying right, you can use hard money to purchase/rehab, then refinance when you get a tenant in (2-3 months),if you buy it right, manage the rehab, watch your budget, etc, you will have a lot less than the 25% down you will be required if you go straight to conventional financingl(plus rehab),of course you will have paid 4 points or so, two closes and 14% interest for a few months,but it helps your cash situation

talk to a hard money lender, they can explain in detail what I’m talking about

Thank you for the response. I hear what you’re saying but I was told you needed to own the property for at least 12 months before you could refinance conventional and pull %80 equity out.

your not taking cash out, you are financing with hard money, then refinancing with a mortgage,no cash out, and you have less cash in the deal

That’s a rule your bank has - to my understanding - at least when it comes to conventional financing. You will probably have better luck when dealing with mortgage brokers. There are some mortgage brokers who write loans for 30 or more banks…so you can get a lot of answers fast when talking to one of them. One guy I know was still offering LOW-DOC loans not too long ago when virtually no one else was doing them…however you had to still have a high income, great credit and put 40% down on your property. So definitely shop around and don’t limit yourself to two or three banks even

CT Investor,

I’m assuming that is the answer you got from one bank? Try another bank. I had to talk to 4 or 5 local bankers before I found one that was willing to work with me. Again I cannot stress enough try Credit Unions.