How to purchase my 3rd investment property?

3 Replies

Hi everyone! This is my first post to BP. I have a few questions. I am a new investor, I have two investment properties and I'm looking to buy my third. I have talked to all the banks I know of and I have cash to purchase with 20% down but all the banks are asking for at least 6 months PITI on each property I own including my personal residence. My investment houses I own are fairly newer purchases with little equity. I just feel like I have hit a wall with banks and not sure where to go from here. Thanks for the help. Russell

@Russell Engstrom Having cash to cover 6 months of PITI is a typical requirement and, honestly, it is a pretty wise. You don't want to be in a position where you are going default if a rent payment doesn't come in, or you have no options if a major expense strikes.

But it doesn't have to be cash on hand.  Do you have a 401K or other investments that can show these types of funds?

If not, then either be patient and save up a bit more money.  Time and savings will erode the brick wall for you.  Or you might consider partnering with someone.

@Russell Engstrom  

what @Larry T.  

said is correct regarding 401k's, IRA's, TSP, and similar investment accounts. Normally for those you can use 65% of the current value. Also any type of life insurance that has a cash value, or annuity will work.

Thanks for your advise, I have PITI for 6 months but then no down payment. I'm looking to pull from my 401k for a down payment Then I don't have my reserves. I am looking at CD's to buy a property then flip it. I would use my 401k to pay for the rehab costs. Has anyone tried this or is it advisable? I know I would be putting everything on the line but taking a risk is a cost right?!?