Contractor · Salisbury, NC · Member since 2018 · 17 posts · 7 votes
Looking to build multiple multi-family rentals and would like to know different options if getting funds besides using my own money. Any advice would be great.
Rental Property Investor · Clearwater, FL · Member since 2017 · 36 posts · 70 votes
8y
I started the old-fashioned way, by making sure my credit/income was good and I applied for loans with banks and mortgage brokers. I probably did my first five or six deals that way. The paperwork can be a hassle but having a loan with timely payments helps your credit score and helps you build credibility, not only with bankers but also friends, family, colleagues, etc.
Once you have a proven track record of buying and managing rentals, you can explore the private money options (from those same friends, family, and colleagues). You can start with private money and skip the banks, but for me, having a proven track record of success really put my private lenders at ease and I was able to get loans at great rates and great terms. I don't think I've used a traditional bank lender (with the exception of credit lines) for over 10 years, because it feels great creating a win-win for you and your investors, and getting to skip the mountain of paperwork banks require.
Rental Property Investor · Clearwater, FL · Member since 2017 · 36 posts · 70 votes
8y
I started the old-fashioned way, by making sure my credit/income was good and I applied for loans with banks and mortgage brokers. I probably did my first five or six deals that way. The paperwork can be a hassle but having a loan with timely payments helps your credit score and helps you build credibility, not only with bankers but also friends, family, colleagues, etc.
Once you have a proven track record of buying and managing rentals, you can explore the private money options (from those same friends, family, and colleagues). You can start with private money and skip the banks, but for me, having a proven track record of success really put my private lenders at ease and I was able to get loans at great rates and great terms. I don't think I've used a traditional bank lender (with the exception of credit lines) for over 10 years, because it feels great creating a win-win for you and your investors, and getting to skip the mountain of paperwork banks require.
Contractor · Salisbury, NC · Member since 2018 · 17 posts · 7 votes
8y
@Russ Smith
I'm a custom and spec home builder. I've had a good bit of home loans in my name but most banks around me wont touch investment property builds anymore. Really hard to find one
I started the old-fashioned way, by making sure my credit/income was good and I applied for loans with banks and mortgage brokers. I probably did my first five or six deals that way. The paperwork can be a hassle but having a loan with timely payments helps your credit score and helps you build credibility, not only with bankers but also friends, family, colleagues, etc.
Once you have a proven track record of buying and managing rentals, you can explore the private money options (from those same friends, family, and colleagues). You can start with private money and skip the banks, but for me, having a proven track record of success really put my private lenders at ease and I was able to get loans at great rates and great terms. I don't think I've used a traditional bank lender (with the exception of credit lines) for over 10 years, because it feels great creating a win-win for you and your investors, and getting to skip the mountain of paperwork banks require.
Good luck!
Did they look to see how much cash you had on hand as well to see if you qualified?
I currently have a really good credit and a gross 6 figure salary. However, I don't quite have enough cash on hand for a down payment in the market I am interested in. I have an emergency fund but I'm not dipping into that. I'm working on saving more...that has been my big trip up.
I'm a custom and spec home builder. I've had a good bit of home loans in my name but most banks around me wont touch investment property builds anymore. Really hard to find one
Sorry Jeff, I misunderstood your question. When you said "build" I thought you were talking about building a portfolio of rental properties, not physically building new properties from the ground up. Unfortunately, I do not have much insight to provide with your current dilemma.
Did they look to see how much cash you had on hand as well to see if you qualified?
I currently have a really good credit and a gross 6 figure salary. However, I don't quite have enough cash on hand for a down payment in the market I am interested in. I have an emergency fund but I'm not dipping into that. I'm working on saving more...that has been my big trip up.
Hey Kevin, I'm going back quite a few years since I last got a bank loan. Lending requirements were not as strict as they are now. But to answer your question, yes, I had to show reserves for each property I already owned, plus down payment funds and reserves for the new purchase. I want to say the reserve requirements varied between 3-6 months of reserves for each property depending on the lender, which can definitely add up. Fortunately for me, back then, properties were much cheaper so the reserve requirements were more attainable. I don't know what lenders are asking for now. And you being in CA.......I hear it's rather expensive out there!
Did they look to see how much cash you had on hand as well to see if you qualified?
I currently have a really good credit and a gross 6 figure salary. However, I don't quite have enough cash on hand for a down payment in the market I am interested in. I have an emergency fund but I'm not dipping into that. I'm working on saving more...that has been my big trip up.
Hey Kevin, I'm going back quite a few years since I last got a bank loan. Lending requirements were not as strict as they are now. But to answer your question, yes, I had to show reserves for each property I already owned, plus down payment funds and reserves for the new purchase. I want to say the reserve requirements varied between 3-6 months of reserves for each property depending on the lender, which can definitely add up. Fortunately for me, back then, properties were much cheaper so the reserve requirements were more attainable. I don't know what lenders are asking for now. And you being in CA.......I hear it's rather expensive out there!
I figured as much. Building my war chest has definitely been my weak area this past year. Battening down the hatches starting now!
CA isn't really that expensive. I see properties that are easily obtainable...and then I wake up from my dream. Yes it is. This is why I am looking at out of state markets such as Indianapolis and Boise where my CA income can go a lot further.