Am I ready to buy a rental property if this is my situation....

[Account Closed]

Currently we have $100,000 in cash. 

I own 2 businesses and they both are in year 3. In year 2, we generated about $50,000 in profits from one business (50-50 as I split it with a partner) and $30,000 in profit from the other.

My credit score is 740. 

My two main questions:

1) Since I don't technically have an income because the money we earn just goes in the bank account, how can I show to the banks that the mortgage will be paid. Can they look at the business income? 

2) Since I have $100,000 in cash and a above average credit score, how much can I leverage that cash? Can I look into properties that are lets say about $700,000? I know the standard down payment is about 20% but there are loans where I can put less money down. I would be looking at a multi-unit property. 

I am 25 years old and relatively new to the whole real estate investing world. Hope the information about is straight forward and not ambiguous. Thanks for your input!

[Linda Weygant]

Are your businesses S-Corps, C-Corps, LLCs, Partnerships?

If you've got 2 years of tax returns from the businesses showing profit and they are NOT C-corps, then that income would have flowed through to your personal tax return and most lenders will use that income in calculating your Debt To Income Ratio.  Even if you didn't pull money out of the business, you could have.

C-Corps are a bit trickier and you'll have to see how the underwriter chooses to use that information.

This is for "traditional" lending.  Since it looks like you're looking to go commercial/multi-unit, you should probably contact a lender or two in that space and see what they think as I've seen/heard of commercial lenders going all over the board with their requirements.