Should my friend buy or not?

Question

So I have a friend who was injured at work and is not currently working. Due to seniority he knows he will be fired when he returns. Would it be smart for him to purchase an investment property since he will be approved and will have the two year work history to get approved or should he just wait it out until after he finds another job? He would like to purchase within a year and is thinking about going for it bc for now he has 2 years of work history but he will not once he’s off injury.

Alan Feldman · Answer

I was in a similar situation a few years ago after selling a business that I was a sole-proprietor of. Basically the mortgage lenders didn't like that I wasn't earning any income, and had I been approved while I was working and closed, things would of been much easier.

I would caution you about that grey area between work. The lending bank may still require proof of employment at the closing. So don't commit unless you have the financials to support it.

Even though the deal will financially support itself, banks want to see a track record of performance before they allow rental income deals to stand on their own. For example, rental income will only count after a years worth of performance and tax records to prove it.

BTW, I'm not a financial advisor, so take this advise in stride, and seek advise from those that are.