How fast can I be pre-approved after closing?
I will be closing on a rental investment in two days and already have my eyes on another. I believe I found a way to come up with another 25% down payment for it. Would I be pre-approved for another loan right away?
I can't say what your lender would do, but private lending companies would approve new investors for at least 3 loans at a time. And if you reach your limit with one company, you can always work with another.
If you're an experienced investor, there's no limit. You can do as many projects as you can handle
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Quote from @Miranda Holland:
I can't say what your lender would do, but private lending companies would approve new investors for at least 3 loans at a time. And if you reach your limit with one company, you can always work with another.
If you're an experienced investor, there's no limit. You can do as many projects as you can handle
Definitely not experienced. As finishing my first deal, if I repeated the process with a bank loan after 25% down, is there a wait period for any reason?
Why would I not be pre-approved with the similar amount after I show the rental income from the first deal since my financial makeup did not change much except I got a new loan, but a new cashflow stream to support and overcome it...
I am thinking about going private lending for the new down payment just to accelerate things instead of saving on my own, but I am looking for the rest from a conventional bank loan. A chance I could go for the whole from the private lending if it aligns up well. Will analyze that next.
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It depends on how much they will lend you. IF you were pre-approved for $500K and you bought a place for $100K, then you'd like be able to get another loan for up to $400K. But if you bought a place for the max of $500K, then it is unlikely. I bought two places within a month of each other with mortgages through a bank.
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It depends on what type of loan you are doing. Conventional, you will need room in your DTI for another payment. You get to add 75% of the projected rental income to offset that. Private Money/Non-QM would want to know that the asset is going to cash flow.
If you do multiple deals with the same lender they might give you a letter that you can use more than once. So long as you aren’t using it to be deceitful I don’t think there is an issue with it.
I have one that I can use, with a lender I’ve worked with a few times now.
Quote from @Nilay Engin:
I will be closing on a rental investment in two days and already have my eyes on another. I believe I found a way to come up with another 25% down payment for it. Would I be pre-approved for another loan right away?
A good question for your lender. It will depend not only on your liquidity but also your DTI.
Quote from @Nilay Engin:
Quote from @Miranda Holland:
I can't say what your lender would do, but private lending companies would approve new investors for at least 3 loans at a time. And if you reach your limit with one company, you can always work with another.
If you're an experienced investor, there's no limit. You can do as many projects as you can handle
Definitely not experienced. As finishing my first deal, if I repeated the process with a bank loan after 25% down, is there a wait period for any reason?
Why would I not be pre-approved with the similar amount after I show the rental income from the first deal since my financial makeup did not change much except I got a new loan, but a new cashflow stream to support and overcome it...
I am thinking about going private lending for the new down payment just to accelerate things instead of saving on my own, but I am looking for the rest from a conventional bank loan. A chance I could go for the whole from the private lending if it aligns up well. Will analyze that next.
You can always find a private lending company that will work with you. Whether or not you will be pre-approved for a conventional loan is based on how the lending institution's guidelines matches your situation. Private lending companies are not big on pre-approvals. If your deal makes sense and the property is valued at at least 75k, you should be able to find a lender with 25% down
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Glad I asked to gain all of this insight form you all that I couldn't find searching online.
On that note, is there a thread that the private lender resources were discussed, so I don't double down on the posting?
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I'd start with your current lender and if they say no, just keep knocking on doors until you get a yes. As others have already suggested, consider both traditional and private/HM lenders.
Hi @Nilay Engin, it sounds like you are planning on going through the same lender if possible and exploring PM/HM if that doesn't work out. I would let your lender know as early as possible so that they can start running numbers and get back to you. If its a conventional lender, they will mostly be looking to make sure that your DTI won't be outside of their acceptable spread.
As mentioned above, private money or hard money could be viable options depending on how the conventional lender comes back. Private money lenders will want to see your personal financials and get a resume on you, and may check in with you regularly if they have not worked with you before or you have less experience than they typically require. Hard money lenders on the other hand are going to mostly be looking at the characteristics of the particular deal you are working on, and will want to know how it will play out for the upon completion.
No matter what, you've got options moving forward. TONS of resources here in the forums on working with private and hard money lenders, I would suggest using the search function and checking out some of the more popular threads in there in order to gain as much info as possible. Some super helpful users on here who have used PM and who are PM lenders (like @Bradley Shaw above), who are more than willing to answer any questions you have and talk through what has and has not worked for them and what you need in order to get funding.
I do not have extensive experience personally using private or hard money lenders, but am happy to answer any questions or help in any way I can if you ever need anything.
Best of luck on your investing journey, Nilay! Glad to hear you're taking down your first one tomorrow and can't wait to follow along and hear how it (and the subsequent ones) go after that!
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As long as its leased and you can provide a lease doc, assuming you have room for another note in your DTI- you should be all good. Good luck! Congrats on the first deal!
You can be pre-approved fairly quickly after if you are going through traditional methods, just depends on the lender you go with. I would recommend that you also look into DSCR loan which will not look into your DTI ratios, employment, or income. Since you are coming in with around 25% down this sounds like a good fit, allows you to purchase another home without having to dig into everything else. These are investor-friendly loans. All you need is the cash, a good credit score, and for the appraisal to come in where you need it.
Quote from @Adonis Moreno:
You can be pre-approved fairly quickly after if you are going through traditional methods, just depends on the lender you go with. I would recommend that you also look into DSCR loan which will not look into your DTI ratios, employment, or income. Since you are coming in with around 25% down this sounds like a good fit, allows you to purchase another home without having to dig into everything else. These are investor-friendly loans. All you need is the cash, a good credit score, and for the appraisal to come in where you need it.
To piggy back on Adonis,
You can do a DSCR to avoid the DTI issue. Also, you can do a cross collateralized loan to put less down and have more in reserves. You could of also done a blanket loan on the two properties and later refi once the rates cool off.
Quote from @Adonis Moreno:
You can be pre-approved fairly quickly after if you are going through traditional methods, just depends on the lender you go with. I would recommend that you also look into DSCR loan which will not look into your DTI ratios, employment, or income. Since you are coming in with around 25% down this sounds like a good fit, allows you to purchase another home without having to dig into everything else. These are investor-friendly loans. All you need is the cash, a good credit score, and for the appraisal to come in where you need it.
I need to understand this DSCR deal... I have never heard it being mentioned before.
My DTI did not change - in fact will be improving with the last purchase as long as I have renter. My risk is increasing, but my DTI is still in the same range.
Quote from @Melanie Thomas:
As long as its leased and you can provide a lease doc, assuming you have room for another note in your DTI- you should be all good. Good luck! Congrats on the first deal!
Thank you. It is leased. The tenant agreement was already fulfilled and the tenant moved in before the closing. My DTI will be the same range with a slight improvement immediately. Sounds like I am in good shape to go at it again as long as I could gather another 25% down...
Quote from @Nicole Heasley Beitenman:
I'd start with your current lender and if they say no, just keep knocking on doors until you get a yes. As others have already suggested, consider both traditional and private/HM lenders.
I actually asked while on the phone today discussing today's closing. And they said most docs will be good for another 120 days and they can turn it over and continue to work with me.
The only question is if I will find a property in the areas they are serving. (My previous lender is in CA and he could not work with me for a OH property...)
Looks like 1) I will find a deal I like and see if the same lender can come in 2) apply for some business credit to accelerate down payment obtainment because I don't have the cash for 25% down immediately right now and trying to accelerate this.
Quote from @Nate Sanow:
If you do multiple deals with the same lender they might give you a letter that you can use more than once. So long as you aren’t using it to be deceitful I don’t think there is an issue with it.
I have one that I can use, with a lender I’ve worked with a few times now.
My credit score drops every time I buy a house, so I wondered if the lenders shy away from you. My pre-approval price point was not very high to begin with, but works with the markets I'm looking at. Guess as long as I prove that I come up with the down payment right away, it won't be an issue because the last deal actually improved my cashflow ongoing.
I'm a private money lender here in Kern County and cover CA only so I can speak to that.
There's no limit on pre approvals for hard/private money. As stated above if the down payment and cash flow make sense, we rely more on the collateral than the borrower up to certain loan amounts. There are always creative ways to lower a down payment while giving a PH lender the Loan To Value ratio they desire to get a deal done (i.e. blanket loans on more than one property, seller financing in the second position). DCSR will basically make sure the rent payment covers the loan payment and works within their parameters. While DCSR gives you decent rates compared to PH money, PH money can be more flexible. Both are normally shorter term. Like above, banks/conventional lenders are wary if DTI ratio is too high but there should not be a limit to how many properties they will lend on unless it doesn't make sense. Hope this helps,
@Nilay Engin- no you wouldnt be pre approved automatically ....as you just worked with a lender for a new loan - contact this same lender and ask to be pre aprpoved for the new property - this will be the most efficent strategy ...if they arent able to assist - contact a new lender asap and begin the process from scratch . Thanks and good luck
@Nilay Engin, yes you could get preapproved again immediately and use the lease to offset the mortgage on the one you just bought. Where is the property at? You could also do just 10% down and no MI on a 1-4 unit investment property with Academy Mortgage.
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I usually get one same day for my clients. Yes, it does depend on how complex your earning, assets and expense statements are, but one day should be fine in most cases
Thank you all! I got a huge encouragement and decided to accelerate my next deal with the reassurance I gained from all of these responses.
Currently analyzing the inventory lists I got and started my funding sourcing.
Quote from @Grant Schroeder:
@Nilay Engin, yes you could get preapproved again immediately and use the lease to offset the mortgage on the one you just bought. Where is the property at? You could also do just 10% down and no MI on a 1-4 unit investment property with Academy Mortgage.
Analyzing PA, AL, OH properties currently.
10% down no MI??? Sounds like a dream. My previous lenders kept squeezing me for 25% down which I never did before, but this time. Would love a 10%. I avoided some TN properties that I was interested in due to not being able to come up with the 25% down in that area.
and I was able to complete two back to back deals. from 0 to 2 in about 3 months. Works out well if you have the down payment figured out. For some reason I was under the impression that lenders won't lend in such a short amount of time of completing closures. Though it doesn't make sense as I know some people close on many deals all at the same time.
Now looking forward doing capital replenishment with the accelerated cashlow from these properties for the next onw in 6-9 months.