First Time Real Estate Investing Financing

[Brandon Borah]

Good morning,

I am looking to purchase my first investment property (specifically in Noblesville area) for a buy and hold strategy in the $50K sales price, but have ran into some issues/questions regarding financing. I can pull a HELOC for approximately $30K and want to see what my options are. If anyone could assist with answer the below questions and/or could suggest a lender, I would be very grateful.

I have been advised by a couple of lenders that the minimum they will loan is $50K. Are there any lenders/credit unions that would lend less? Say $30K?

What does it take to finance a rental property such as cash reserves, closing costs, add-ons, etc.?

If I get a HELOC, is there a time frame the cash must be in my checking account prior to being considered for the down payment?

Are rental incomes considered in debt to income ratios?

What is the process on lending to LLCs? As in which lenders will lend to LLCs with personal guarantees because the lenders I have spoken to have advised only individuals?

If there is a wholesale agreement for a property, is it possible to still go through a lender to have the property assigned or must it be a double closing?

Thank you, 

Brandon 

[Brie Schmidt]

I have been advised by a couple of lenders that the minimum they will loan is $50K. Are there any lenders/credit unions that would lend less? Say $30K?

It is very hard to find these. Most banks will have a $50k min so I suggest going to your local REIA and asking around for referrals.

What does it take to finance a rental property such as cash reserves, closing costs, add-ons, etc.?

Most I know will require 6 months PITI (principle, interest, insurance, taxes) for all properties you own including your personal residence. Closing costs will vary by city and county. Add ons would be appraisal and inspection.

If I get a HELOC, is there a time frame the cash must be in my checking account prior to being considered for the down payment?

With a HELOC since it is considered your money there is usually not a seasoning requirement but the payment will be added to your DTI calculation.

Are rental incomes considered in debt to income ratios?

Depends on the lender.  The two main purchasers of loans are Fannie and Freddie.  One of them requires you to have 2 years of rental income on your tax returns to use that income to qualify for a loan.  The other does not (I think it is Freddie but I always forget) So if you are a first time investor and you need to use the rental income to qualify make sure your lender is planning on selling to the one who will take it.  

What is the process on lending to LLCs? As in which lenders will lend to LLCs with personal guarantees because the lenders I have spoken to have advised only individuals?

You are talking about residential loans, which are only loaned to an individual. Commercial loans are only lent to a LLC but that is a totally different ballgame.

If there is a wholesale agreement for a property, is it possible to still go through a lender to have the property assigned or must it be a double closing?

I don't understand.  Why would you go through a lender to have it assigned?