A few Questions…
1.) Can you obtain multiple mortgages on different properties simoultaneously?
2.) If your properties are rented, how many mortgages can you obtain (I know this will depend on a variety of variables)? And what is the best way to document the income of your properties to show that they’re covering their debt (so a loan officer can see they are investment properties generating income)?
3.) Is is easier to refinance multiple properites if they are owned free and clear?
I am interested in picking up 10 single family residential properties over the next year and would like to know the best way to position myself to do so.
Thanks in advance.
Brian
Brian,
Where at in the Midwest are you? I’m located in St. Louis.
It would be best for you to have a consultation with a mortgage planning consultant that specializes in investment loans. As you pointed out, there are so many variables - credit, income, assets, down payment…etc.
Just a couple quick answers to some of your questions.
You will be allowed up to 10 conventional mortgage loans through most of the banks that mortgage brokers use. These are the Fannie Mae and Freddie Mac loans which will offer the most attractive terms. A full doc (full disclosure of employment, income, and assets) loan can be done with about 10% down. That will increase if financing a 3 or 4 unit. Clients that choose not to document income may be able to qualify for a “stated” income program. Down payment amounts will increase even more with these.
In any case, once you’ve gone over this limit of 10 or if you cannot qualify for that type of conventional loan, then there are always Alt-A products. Thse loans are offered by the same lenders mentioned above. With these, downpayments can be as low as 0% and additional reduced documentation options such as no ratio and no doc can be done. There are a handful of these lenders that will allow an investor to have an unlimited amount of properties.
You can visit my website under the investment section for more details about documentation types.
The way that lenders want you to document the income from rental properties for the first year owned will be via your 1 year signed lease. 75% of that income will be used for qualifying. After owning for 1 year, lenders will want to see schedule E of your tax returns. Under the reduced documentation loans, these tax returns will not be required.
I wasn’t sure exactly what you meant with question 3. It appears that maybe you’re going to buy with cash and then refinance later. If you’d like to shoot me an email with an explenation of what your investment plan is pertaining to question 3, I’d be happy to address it in detail.
Picking up those 10 properties over the next year will be managable.
A few Questions…
1.) Can you obtain multiple mortgages on different properties simoultaneously?
Yes.
2.) If your properties are rented, how many mortgages can you obtain (I know this will depend on a variety of variables)? And what is the best way to document the income of your properties to show that they're covering their debt (so a loan officer can see they are investment properties generating income)?
Each rental property that you currently own can obtain two mortgages, unless you have a private 3rd mortgage. The best way to document your properties would be determined through your application. If your obtaining a no income loan you will not be documenting the rental income. If you are obtaining a full doc loan, then you will probably be documenting the income along with rental leases to show underwriting in some cases. And as Ben has stated, underwriting will accept 75% of the documentated income.
3.) Is is easier to refinance multiple properites if they are owned free and clear?
To underwriting, it doesn’t matter so much if they are free and clear or whether you have a mortgage on them.
I am interested in picking up 10 single family residential properties over the next year and would like to know the best way to position myself to do so.
The best way would be linking up with a professional mortgage loan officer who knows how to put this together. Your quest to purchase multiple properties may entail different sources of creative financing depending on your overall loan application and how many properties you are looking to obtain at once.