Asset rich, income poor, trying to get financing

[Matthew Graham]

Anybody have ideas about the best way to finance when income does not qualify you for a conventional loan? I’m 46, retired from my career as a physician, with about 3 million in assets and looking to focus on real estate to generate cash flow. I’d like to buy single family homes and do a rent and hold pattern to generate this extra income.  Would really prefer to not pay cash for a property but without a lot of active income, am having trouble getting a loan, even with my assets.  

[Jill F.]

We were in a similar position but with less than 3mil in assets. The answer for us was a small local bank that specializes in multi-family financing in our area. While the terms of a commercial loan are not quite as sweet as residential 30-year fixed (25% down 5year ARM), there are some advantages: you can buy buildings with more than 4 units, you can hold the properties in an LLC, our bank will cross collateralize other assets with no mortgage or where they hold the 1st. They go to loan committee every week so we get quick approval for a deal. You should have no trouble at all with a commercial lender. They look at the DSCR (debt service coverage ratio) for the deal rather than Debt to Income.