I have been buying strong cashflow rental properties in Decatur Alabama. I everything is going well with the properties and I am continuing to find good deals to pursue.
I have 2 multifamily properties I would like to buy right now and they would get me some really good positive cashflow, but the banks are telling me no now. They think that my debt to income ratio is too high because I have 3 mortgages. I have a high paying day job and was a sailor from many years so I live on ~20% of my take home an invest the rest and can currently cover all of my properties mortgages just on my salary. I am financially very comfortable, but the bank thinks I am becoming risky. They want to see 2yrs of property rents reported on my taxes to include the rental income in my debt to income ratio.
Additionally, the bank is taking ~3+ months to complete a closing and I keep having to produce this massive packet of paperwork to get the underwriting done.
What I would like to know is what strategies are you all taking to secure secure funding? do you have any tips/tricks? should I be working with smaller banks? do I need to be looking for private capital?
I would be greatly appreciative if you all would share your wisdom with me. Thanks!
Go to some local mortgage companies and see if they're willing to be of more help. Banks are silly a lot of the time.
On my first multi-family deal a specific bank turned me down and I went to a local mortgage company. The local mortgage company got me a loan... with the very same bank that initially turned me down!
If all else fails you can look at private money but work hard contacting local mortgage companies first (and look to the national ones if need be).
Hey Seth, I definitely agree with Karl about local mortgage companies. Check out credit unions and small banks with portfolio lending (may not be called that) as well, they tend to be more flexible and more willing to work with people. Also, you could consider finding partners in your area to invest with where they could put the mortgage under there name so it doesn't go against your credit report. If your deal is good enough you'll always be able to find money. Hard money is also a possibility but I'd recommend that more as an option for a BRRRR where you can do a cash out refinance and pull your money back out of it.
Interesting, I thought banks were "mortgage companies". I did not even realize that was a distinct thing I will definitely be looking into this immediately.
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