How to Get a Loan for an Investment Property

  • Does portfolio lenders offer 30 years fixed rate?do you think it is better to buy cash, rehab, then refinance than morgagte, rehab, then refinance? As a server, my w2 is horrible because mostly my income is from tip which does not show in w2. So I don’t have much choice, but to buy rental property by cash and wait for my w2 to get better and cash out refinance and hopefully qualify for the mortgage in next year or couple years.
    James

    • Hi James, my portfolio lender does not. They only offer 5, 7 year ARMs or 15 year fixed. The ARMs have a 30 year amortization though. I don’t think many portfolio lenders offer 30 year fixed. If you have the extra cash it probably saves you money to buy with cash and then refinance, but most lenders are going to want to see you hold the home for at least a year before they will refinance for more than the purchase price. You could always show your tips on taxes, but then you’d have to pay more in taxes. A tricky situation for those in the field.

  • I cannot show my tips in my tax due my restaurant policy(they want to hide their “real” income), and I don’t want to pay more tax on earned income. However, last year I bought 3 rental properties; two of them are rented, but the 3rd is on rehab and ready to be rented next month. My situation is kinda strange because my this year income in w2 will be almost 100% higher compared to last year. Do you think I need to wait one more year to qualify for the mortgage? because my income inw2 suddenly go up from rent and also I heard that bank want borrower to have steadily income for year or more. Be honest I want to be qualified for mortgage now because I don’t want all of my money tied down in my properties. I rather use leverage to increase my passive income. (I strongly agree with your article about leveraging to increase ROI)

    • I would check with your lender and see what you qualify for now. They can usually average the last two years so you may be able to do it now.

  • The brand new home finance loan guidelines ended up drawn up through the Client Monetary Protection Agency, created following enactment with the Dodd-Frank Act this year. Some fresh rules are created to shield home owners coming from lender along with mortgage-service abuses.

  • How do you find out your personal qualifications and debt to income threshold that banks will give you loans for?

    • Hi Ken, Talking to a lender is the best bet. You can also try online qualifiers.

  • Skips the banks. Their outdated underwriting models/practices best suit the age of W-2 wage earners, not the real estate entrepreneurs of the new millenium, where speed counts and the Gig-Economy disrupts! Whether large commercial banks or community portfolio lenders, their market dominance in the sphere of lending is rapidly eroding. Income stability is shifting from W-2 to 1099, Schedule C and other forms of revenue reported to the IRS. The age of non-bank fintech lenders (be they institutional/insurance companies, private equity, et al) often require far fewer docs, since they’re not hindered by banking regulations, and actually lend on the asset’s performance, rather than the borrower who may not conform (eg self-employed, etc). There are many new mortgage products now tailored for investors, including those that factor STR Airbnb income. Mortage brokers can also supply investors with many more sources of mortgage financing than banks.

    https://www.inman.com/2016/11/01/big-banks-cede-market-share-to-nonbanks/
    https://thefinancialbrand.com/70240/business-banking-strategy/
    http://www.bain.com/publications/articles/retail-banks-wake-up-to-digital-lending.aspx
    https://gomedici.com/are-traditional-players-losing-out-on-retail-and-commercial-banking/
    https://www.nytimes.com/2017/01/21/business/dealbook/quicken-loans-dan-gilbert-mortgage-lender.html

    • Mark Ferguson says:

      local banks can be a huge asset

  • Lorraine Logan says:

    In regardd to our free ebook, I would like a regular book copy, if one is available. I do not download.

    • Mark Ferguson says:

      I have books on Amazon you can buy hard copies of but not the free ebook

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