Board Topic: How Can I get Financed?
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How Can I get Financed?

Posted by: John H. May 12 2004, 11:33 AM
Hi, I'm interested in real estate investing. I've read alot of books and seminars on investing, and I am a "newbie" loan officer so I know a little about financing guidelines. I have a mortgage on the home that I live in now. I have a roomate that pays his half to me each month in cash and I have no late payments. My credit is around a 650 mid score. I also have about $5,000 in my business account. My problem is my employment history. I was self employed for 2003 as a loan officer and I was W2 employed in 2002 in a different industry. I dont have two years of continuous employment at either job. I am currently employed (since Feb. 04) at the same type of W2 job I had in 2002, and I am still self employed as a loan officer. How can I get a loan for an investment property? unsure.gif Would I qualify for a stated income or 12 month bank statement loan? If so, would I still have to supply tax returns and sign a 4506? I typically want to buy, rent and hold my first few properties, and maybe refinance for cash after about a year. Thanks in advance for any advice!

Posted by: loanuniverse May 12 2004, 08:55 PM
John:

A truly income producing property loan will rely on your personal income as a secondary source of repayment. The loan will be repaid with rental income. As an analyst, I would only be concerned if you are unemployed or made so little as to not having enough to live on. Overall your employment situation while not a positive, should not kill the loan if the other numbers are right. Your credit score is not great, but it is also in what is considered adequate.

”...stated income or 12 month bank statement loan...” These are residential products, you are asking advice from a commercial credit analyst. I would try for one of those “investment property loans”. I have heard of banks offering such a product under the residential line. On the other hand, by going with a residential product you will be looked at more closely where your weaknesses might be. While going with a purely commercial product, the deal will hinge mostly on cash flow.

Good luck.

Posted by: John H. May 13 2004, 02:51 PM
Thanks, I'll try to go the commercial route with my first property. However, that brings up another question.. Won't I have to put a higher downpayment on a commercial property? I dont know anything about commercial lending guidelines, but I've been told that normally commercial lenders dont finance more than 80% of the purchase price. Is this correct? Do they allow a seller second for the other 20% or a portion of it? If I find a duplex that I want to buy and it is in a residential neighborhood, could I still get a commercial loan since I will use it as an income producing property?

Posted by: loanuniverse May 13 2004, 05:59 PM
"'ve been told that normally commercial lenders dont finance more than 80% of the purchase price. Is this correct? You are correct 80% loan-to-value is pretty much the standard with some going only up to 75% for multi-family. Other types of commercial property might have a lower loan-to-value, but you are not interested on those.


Do they allow a seller second for the other 20% or a portion of it? Not very common, but not rare either. Just make sure that you take both debt services into account. There is a spreadsheet on this site in the sensitivity analysis page that can help you with this.

If I find a duplex that I want to buy and it is in a residential neighborhood, could I still get a commercial loan since I will use it as an income producing property? Correct again.
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