Hello
I have been interested in buying real estate for awhile and I am trying to convince my husband that it would be very profitable. He is hesitant bc we talked about buying another house to live in and thinks that if we get 2 or 3 rental properties once we try to buy our own home to live in the bank will not give us a loan bc our debt to equity will be too high.
PLEASE EXPLAIN TO ME HOW INVESTORS WITH 5-10 PROPERTIES GET AROUND THIS WITHOUT THE BANK SATING OK THAT IS ENOUGH BORROWED MONEY!!!
Your husband has somewhat of a point, however, you can still buy as many investment properties as you like. What usually happens is that after you own a certain number of properties some lenders will not do anymore loans with you because they have a certain limit of loans they will do for you. That does not mean that you can no longer buy more properties. It just means that you will have to go to different sources to get financed.
A good strategy would be to figure out how many properties you would like to buy in a certain time frame and talk to someone who can help plan out your financing options. Obviously you want to purchase good, solid properties that will generate good cashflow and not be a financial burden on you. You may want to incorporate after a certain number of properties and keep your liabiity to a minimum, but be careful about how your homes are set up and how you finance them. If you have properties in an LLC, most conventional lenders will have you take them out of the LLC and borrow the money in your own names. That can get tricky at times and slow you down.
NOTE*** If you ever want to try and refinance one of your properties, please make sure that it is not currently on the market for sale or have it listed in the past 6-12 months…Most lenders in this market now are shying away from letting RE Investors do cashout refi’s if the home has been listed…it looks bad.
There are lenders out there that will allow you to do that type of loan, however, the rates are typically not as good and it can be a real nightmare with alot of hoops to jump through…
If you are not dealing with a lender or mtg broker that knows what they are doing you can lose alot of time and in some cases, money…just fyi
Good luck with your endeavor.
There are plenty of loan programs/lenders that allow for the financing of up to 10 properties so that would be your first step.
Once you exceed this level (if you ever do), there are a handful of lenders/loan programs that allow for the financing of unlimited properties.
Regards,
Scott Miller
If you have cashflowing rental properties dti should not be a concern as the income will cancel out the effect of the debt. MOrtgage debt coupled with rental income is good debt.
Great point…most lenders cap the application of rental income towards qualification at 75% allowing for 25% of the mortgage debt to carry to your personal DTI.
Regards,
Scott Miller
As already stated, there are several lenders that can provide you lending so you can reach your goal of unlimited properties should you desire.
It will take a combination of lenders and a knowledgeable broker. Reduced documentation liked stated income or No ratio may eventually be needed if your debt to income increases.
Seek a mortgage consultant who specializes in investment loans for advice as these loans require close attention to detail that many people will miss.
Hard money lenders.