Read and listened but confused on scaling rentals. Help Welcomed

[Sam Marcos]

I've read all kinds of material and listened to hundreds of hours of podcasts.  There is one thing about scaling rentals that I just don't understand.  Can anyone elaborate on this?

The question is, how does a bank approve the financing for buying a rental?  

1) Do you need to have verifiable income to cover your personal monthly expenses PLUS the monthly mortgage payments of your rental?  

2) Do you need to have a tenant already lined up to get approved?  Does that make approval easier?

[Mike McCarthy]

When you're dealing with conventional (personal) mortgages, yes, the bank will look at your debt to income and ensure you have sufficient reserves to pay the mortgage and taxes for approx 6 months on all your assets.

Rental income can be considered, but usually only after 6-12 months depending on the bank.

That's why even though lending rules cap personal mortgages to 10, most people start running into issues at around 4-5 properties.

Once you switch to commercial/portfolio loans, the lender is more interested in the income potential of the properties and less (but not none) on your personal finances. CAP rate, NOI, etc start becoming more important.