Is it okay to offer on two properties at the same time?

Question

I'm in the process of getting my pre-approval letter. My father is going to be my partner on the deal, I know there will be no problems getting the financing. We're looking at two 4-unit properties in Alabama.

My questions:

-Can you only buy one property with a pre-approval?

-Do you have to wait to buy a second property or can you be buying the simultaneously? Like will a bank give you two loan for two different properties??

-If you can't buy two at the same time with traditional financing, what are other options to lock in both purchases?

Please help!!

These are my first multi-unit properties.. Excited to get started with multi-family properties.

Christopher Brainard · Answer

@Nick Monge

Hi Nick and Welcome to BP.

1) You can't 'buy' any properties with a pre-approval letter. The letter just gives you the guidelines on what the bank thinks they will be able to finance you for. For example, it may say that you're pre-approved to spend up to 400k. Most sellers require this letter because they want to know that you can afford the property you are buying. Financing won't be certain until after you complete the underwriting process.

2) Depends on the bank. If you financially can support both properties, then I'm sure there won't be an issue. If you need to rely on the rent from one or both buildings for your DTI, you will need to follow the banks direction on how they would fund them.

3) Private Financing, Hard Money, Owner Financing, Etc. There are hundreds of ways to acquire real estate.

4) You shouldn't have any issues offering on many properties at a time, as there is no guarantee that your offer will be accepted by any given seller. You do need to ensure that once you have your capital expended, that you cancel any outstanding offers that have not been responded to. Its the right things to do :)

-Christopher

Nick Monge · Answer

Thank you for the information guys! I just spoke with a couple lenders and now have a better understanding of the "Pre-qualification" and the "Pre-approval"..

However, my dynamic has slightly changed for my first multi family deal. I'm selling one of my SFH in TX.. I'm going to 1031 into something larger. Pretty excited.

Any recommendations or tips on moving forward?

Polo Vazquez · Answer

I'm assuming that if you get them with the same bank it should cause no problems. If you get it with different ones then you will have be providing all the info to both banks simultaneously and can a be hazzle. I'm not 100% sure though i've never done it