I am very new to real estate but am very interested to pursue a career in real estate in the near future. I apologize in advance if my question is silly/stupid.
My question is, how is it possible to finance for multiple properties at the same time? I'm not sure if that's exactly the way I would like to word my question and I know there are a variety of ways to finance for real estate but let's say, for example, if I put 20% down on a property and get a loan from the bank for the remaining balance of the purchase price. Assuming there is positive cash flow being earned when I rent out the property. A few years later, I save up enough to put another down payment on another property. But doesn't the bank usually look at how much I earn annually to determine how much they will lend me? What if I've reached the maximum that I've been approved for my previous property?
I saw from some where that when you have a x number of units earning income, they start to look at how much cash flow is being generated from the properties to determine how much they approve you for a mortgage. Is that true? And if so, is that true for all places? I currently live in Canada.
Thanks so much in advance for your answers and comments.
Banks will usually count the money that you make from being a landlord as part of you income after you have been landlording for two years. When you buy another property they will also often factor in some of the expected rent from the new property (usually 75% or so, to account for vacancy, etc) Not all lenders use the same criteria, which is why it's important to talk to several
That's in the US. Lending may be different in Canada. I'd suggest a new post with something about Canadian financing in the title
Jean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com
@Jean Bolger - I agree that a different posting with "Canadian financing" in the title would probably be best for Leanne.
@Leanne Shum - In the US, you would need to provide the lender with tax returns, including all schedules, mortgage statements, bank statements, paychecks, credit scores, etc. to get pre-approval and a loan. Investment properties often have different down payment requirements than primary residence properties. Further, if you were to apply for multiple loans at one time (which can be done if you have enough assets/incomes), you would need to provide each lender with the property address, good faith estimates, and approved contract. But, not sure if same/similar holds true for Canada.
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