Buying investment Property after Foreclosure(4+ years)

10 Replies

I have foreclosed my house in Apr'2010. I am looking for buy an investment property in the range of around 250-300k. I am ready to put down 20% and I have sufficient income to pay the mortgage and other expenses for the investment property. 

Every bank/broker, I talked to say that, I have to wait for "7-years", whereas it is only 4.5 years since my foreclosure.

As per the research, my understanding is that, my only option will be with "portfolio loan lenders"

What are my options for me to buy an investment property, considering the foreclosure. 

Also, I am first-time rental property buyer.

Any suggestions?

Thanks

@Udaya P.  Non-portfolio lenders sell their mortgages notes.  To make sure they are saleable, they need to conform to certain rules, just the way whole milk has to have 3.5% fat, whether you buy a quart or a gallon.

Portfolio lenders do not sell their mortgages notes.  They keep them and that is how they make money.  Since it is for themselves they make up their own rules.  Generally you'll need to inquire of smaller, regional banks and credit unions to see if they offer portfolio loans.  Your previous foreclosure may or may not be an issue for them.  If it is, keep calling around.  It may be that you'll need to put 30% down.

Originally posted by @Udaya P. :

I have foreclosed my house in Apr'2010. I am looking for buy an investment property in the range of around 250-300k. I am ready to put down 20% and I have sufficient income to pay the mortgage and other expenses for the investment property. 

Every bank/broker, I talked to say that, I have to wait for "7-years", whereas it is only 4.5 years since my foreclosure.

As per the research, my understanding is that, my only option will be with "portfolio loan lenders"

What are my options for me to buy an investment property, considering the foreclosure. 

Also, I am first-time rental property buyer.

Any suggestions?

Thanks

Hello Udaya,

Yes it is true that Fannie and Freddie have 7 year waiting periods. If you're looking to buy a unit property and live in one of the units FHA only requires 3 years of waiting. If you're a Vet it's 2 years with VA but you would have to live in one of the units.

If it was a short sale then you would be good because that's 4 years for conventional.

I hope this helps. 

Hi there! I wouldn't let the red tape get in your way when it comes to investment. If it is involvement in the property market you want, there are other ways to get your money working for you while you wait out the seven years. One option would be to invest in a crowdfunding project. Another would be to buy REITs or a property-based ETF. Or you could find someone who has a good credit rating with the bank and ask to partner with them. You have the cash, after all, and it would be better to participate in real estate investment indirectly than not at all.

Hard money lender, private lender, IRA lenders and partners are the ways to go. A private lender might be a friend of a friend who has some extra cash that does not want to only get 1% in a CD at the bank.

Quest is a company that has self directed IRAs. Some people use their money to buy for themselves, but some have this money and dont know what to invest in. You have to convince them that YOU are the one that they should invest in. They are going to work somewhat like a hard money lender, but there are usually no rules that are set in stone. Show your ability to pay back, and develop the relationship with the individual. There are other self directed IRA lenders, but I have found that Quest is very friendly and easy to work with.

When you have a deal, let someone else get the loan. You have to give up half the deal, but half of something is better than all of nothing!!!

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Seven Years seems exceedingly long, doesn't it, especially given the meltdown of the housing market?  I guess the banks and investors expected you to be smarter than they are.  :)

@Udaya P.  This post had a recent answer but I see you asked this question 2 years ago.  Did you ever end up buying an investment property?  There are programs now that will allow for purchase after foreclosure much sooner than conventional lenders, although rates are a bit higher.

@Naveen Kumar  Hi Naveen,  the lenders that I work with for these programs are only in certain states, not necessarily nationwide.  I'm only licensed in California so these programs might not be available if you're in Virginia.  Your best bet is probably to talk to a local broker.

In general, you're going to need a much higher down payment (probably 30% or more) as an investor.  There are much more flexible programs for people buying as owner occupants.

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