Can I finance real estate by doing this?

Question

I have an idea, because financing 1-2 properties per year isn't cutting it. Can I do this?

Here is a scenario:

Rental property sale price- $50k

Cash required to finance- $15k (Down payment, appraisal, inspections, closing, minor repairs)

Rent- $900/mo

Take out a personal loan for $10k DP.

Let personal loan season for 2 months (Or 6 depending on lender)

PITI W&S- $700 including personal loan.

I would make no money for 7 years, but I could buy more property.

Basically, I would pay all out of pocket cost, but finance down payment. I would love your input. Thank you!

Curt Smith · Answer

Banks trace the source of the funds for down payment.  They go back 3 months in bank account statements.  You'd need the funds sitting there 3 mo.  Ask a mortgage broker.     Banks want the down to not be from other debt.

Caleb Heimsoth · Answer

@Joshua Hollandsworth. You can try this but it’s likely mortgage fraud.  The bank that does the loan will ask where the money came from for the down payment so you’ll have to tell them.

Caleb Heimsoth · Answer

Sure that’s fine, it’s still not a route I recommend.

Joshua Hollandsworth · Answer

@Curt Smith Thank you. And I know that's usually the case. I was there getting a copy of an EM check and the branch manager started telling me about using personal loans for closing costs etc. And told me that some lenders will allow it, some won't. Thank you.

Joshua Hollandsworth · Answer

@Caleb Heimsoth Thanks I've already spoke with the bank manager, he had informed me that if I let my lender know, it's not fraud. Thanks for the help! Definitely don't want to go down that route!

Can I finance real estate by doing this?

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