I am trying to close on my first rental property. I have some concerns and could use your advice. The purchase price is 62,000. Rehab costs are 27,000. ARV is 130K. With some holding costs, closing costs, ect I will be all in around 100k. It is a triplex currently not rented. The anticipated NOI is $1,680.00. I have already talked to several banks and I found one that will lend me 75%LTV on a 10-1 Arm at 5%, with no balloon payments amortized over 20 years.
My plan was to use a HELOC I have on my personal residence to fund the purchase price and rehab costs get the house fixed up, rented, then do a cash out. My concern is that they won't give me the loan when we are all said and done and I will have my cash tied up in this house.
After that long winded approach I am looking for advice on what banks look for when it comes to personal finances, credit score, cap rate, collateral ect. I am currently in the process of closing on another house a duplex as the loan application is being reviewed. Will that effect my ability to get a second loan. My concern is that they we say my debt to credit is no good. PS my personal credit score is around 790. Any thoughts.
I would establish yourself with a bank ASAP and let them tell you what they'll accept. Look at some of the smaller, regional banks. In my area, those types of banks are very willing to work with real estate investors while the larger ones aren't.
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