Steve, I was in the mortgage business for a long time & am also an investor. I can tell you that there are a TON of lenders & loan programs out there. If you keep your credit clean you will always be able to get 80% ltv loans. But…there are not nearly as many programs out there if you are “newly self employed”. You CAN still do it. It will just be a bit harder. Find a good mortgage broker that works investor loans and get as many different lender guideline & program info as you can. With a history (on tax returns) of RE income you can still go full dock if you need to. Have serious talks with new lenders before you make the leap. It might be worth it to tough it out just a bit longer to make sure that you have plenty of provable cashflows from your real estate. Another year or 2 of pain could pay off with a lifetime of positive cashflow! Good luck! Greg
I have been working at REI for approx three years now and have a total of 38 units via SFH, duplexes and one 12 unit. I am to the point now where I am going to quit my full time job and do real estate full time. Our game plan on getting cash to pay our bills while the rents increase and cashflow increases, has been to buy distressed properties (last few have been REOs) with cash?rehab and put a renter in them and do an 80% cash out refi to pull money out on the front end. The bank we have most of our mortgages with just informed me that they are going to put a 15 loan cap on us and after that they will review our performance, outstanding loans, etc. (which should be fine, but who knows what kind of criteria they will look at). They MAY increase their cap by 5 or so at a time (these are their words). My concern is that we are planning on buy 1-2 properties per MONTH and consequently refinancing 1-2 per month. Obviously if we have a 15 loan cap, we will get to that number rather quickly. This bank is a regional bank, rather conservative, keeps all our loans in “portfolio” fashion, etc. (we have good credit). We can go shopping for some other banks, but are we going to run into this as a common answer? As I said we plan on buying/rehabbing a large volume so financing is obviously key. We have enough cash/credit to buy/rehab several at a time, but I want to be sure that we are going to be able to do cash out refis on a regular basis even if we have to pay higher loan fees to get no doc loans, etc.
My initial feeling is that we will pretty much always find financing?it’s just a matter of fees/interest rate/perhaps even a lower LTV?which is fine; that is just the cost of doing business in my eyes. We have been spoiled with low fees/interest rates to date and part of that may be because of my “steady” (albeit painful) JOB. For example: the last SFH we refinanced after working on it for approx 30+ days to an 80% LTV loan; 3/1 ARM at 6.75% (NOO) with about $2,300 in fees. These terms/fees/rates are wonderful in my opinion and I have a feeling we can kiss them goodbye after I quit.
Please, anyone with multiple loans on SFHs in their portfolio, what can I expect??? Please make me feel warm and fuzzy so that I don’t change my mind about doing this full time!!