Reserves required for financing

[Brian Webb]

I am a newbie and haven't done a deal other than my primary home which is a long term BRRR!

I am trying to get financing in place, or at least identify the institutions that I want to work with, so I spoke with the first bank yesterday. I started with this particular bank because I already have a good relationship with them through our family business. This bank said as part of their approval process on a residential investment property, they need to see 6 months in reserves for the rental and 2 months in reserves on my primary residence to cover the mortgage payments. Unless I misunderstood her, they need to see that for each additional rental property acquired. Has anyone else run into that? Is that a normal requirement?

I will be talking to more institutions and focusing on more local credit unions to find a portfolio lender, but this first meeting was a little disappointing.

[Andrew Johnson]

@Brian Webb For whatever it's worth (others may disagree) I'd max out conventional loans first.  You get a 30-year fixed-rate and interest rates are still historically low.  You don't have to worry about a 20 or 25 year amortization table.  You don't have to worry about balloon payments (and refinancing) in 5-7 years.  You don't have to worry about what interest rates will be in 5 or 7 years.  You don't have to worry about sending annual financials to the bank.  And I'm probably missing a couple of things.  And it's not that any of these things are a BIG deal or a monumental hassle.  I like my lender.  There's never been an issue.  I'm sure they'd be happy to loan me more money.  

But would I rather be able to have a straight-up boring 30-year fixed-rate mortgage on my apartments?  Absolutely.