Buying a house without living in it

6 Replies

Hi BiggerPockets, I am looking for my first investment property. I have found multiple deals with my realtor but he has shot down owner financing as a way to get the deals. Instead he referred me to his lender who seemed shady and untrustworthy. My goal is to get my first buy and hold and learn from this first property. I don’t want to have to live in it and I was wondering if there were other conventional ways to get financing. My fiancé and I both have good credit and steady jobs. Any advice would be helpful. Thank you!

Yes, conventional investment financing is a great option. 20% to 25% down payment. Or possibly Fannie Mae homeStyle (15%) down if it needs any work.

Thank you Michael. The lender we were recommended through are realtor have very little details into other financing

Hey Eric congratulations on getting into real estate investment! 

You're right, there are some shady lenders out there. If you're worried about credibility, best place to find quality lenders is the list of Hard Money Lenders under the network tab on Bigger Pockets. There are 27 featured lenders, all specializing in a different niche of the industry. If you find a lender through another source, make sure the company has an NMLS ID. 

While you should be able to get a conventional loan considering your credit and steady jobs, you may run into problems because of your low experience level. Hard Money Lenders could be worth looking into as they require far less paperwork to qualify you for a real estate investment loan.

Clayton Danly, Lender in CA (#1099109)
(424) 336-7933

What sort of financing is this lender recommending? You can certainly get conventional financing for an investment property. You should expect to have to put 20% down and you'll have to pay 0.5-1% higher interest rate than for an owner occupied mortgage. But these loans are readily available. The tricky part is that as a new landlord, income from the property will be ignored in qualifying you for the loan. So you will need adequate income from your regular job or other sources to cover your existing debts and the new mortgage. Once you have two tax returns showing rental income, you'll be able to include the rental income in qualifying for new mortgages. That includes income from any existing rentals (taken from your tax returns) and the new one (estimated, typically, as (75% of rent) less PITI payment.)

John is absolutely correct about being able to get a conventional loan for an investment property based on your income and good credit. They will also require two years of landlord experience before they give you credit from the income on the property. That would the safest way to do the deal. I'm interested in what kind of terms your lender offered that makes you uneasy, or was it just the vibe you got from them. I always say go with your gut but maybe you need the terms explained a little better  Hard money lenders are expensive and not for everyone but do serve as a valuable tool, when necessary.

Thanks everyone for the responses! The lender wanted me to go down the road of FHA. I have done my homework on it and I understand you have to live there for a year. When I brought this up to the lender he said I could leave after a few months and rent it out that I wouldn't get in trouble. He gave me a weird vibe and just didn't seem like he had my best interest in mind. I am going to do more homework on the conventional loans and weigh some of my options. Again thank you all for responding!

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