BiggerPockets

Hopefully I am on the right road , I have located an area that I will be investing in , I will be buying a property for cash and doing extensive rehab work to it. It is a two family . My plan is to go to a bank when I have a tenant and seek a 1st mortgage and then use that money to buy my second property and so on so forth , Is this a correct scenario or am I being too simplistic?

Historically, this has been a solid plan, but lending has been a moving target recently. You probably want to talk to your prospective lenders to see if you can do this in your area, with your target property, with your credit, assets, liabilities, and income.

All I will say is good luck. However, if you want to even have a chance at this type of financing you will need to go after portfolio loans. Jump into your small local bank and talk to the VP or Bank CEO... Tell them what you want to do and many times they will create a program for you. The best way to accomplish this (finding a bank that is investor friendly) is to talk with other local investors. I regularly refer out contacts to small local banks, and regional banks... However, Jon is right you are going to have a hard time doing a refi to pull out cash. Its hard but not impossible! Good luck

Jim,
Under "normal" circumstances, someone with a free-and-clear $125k home and 785 credit score would have no problems obtaining financing. However, we're not in normal times and good financing is a bit tougher to come by.

As an example, I have a loan that had a 10-year balloon on it. Unbeknownst to me, the loan matured last September. I didn't receive notice on the maturity until late June, when I got a letter with a returned payment stating "we don't accept payments on matured loans". The loan balance is $36k, property value $82k (conservatively), never late once in 10 years, and the rate on the thing is 9.5%. Yet the bank doesn't want to modify the loan even for a few months. I'll be paying it off with cash, but you talk about things just not being "normal", there's a prime example.

Christinia is dead-on - the important thing is to align yourself with a reputable loan officer that has your better interests in mind, and not just a loan closing. Take your time and be cautious. It's a great buyers market right now if you find the right deal and are cash-heavy.