Financing on rentals

[Brady Lee]

I am looking into long term rentals but after listening to a podcast today on BP I have a few questions. Is the best way to get financing just a conventional loan? On the podcast they said that you can't use your rental income to qualify for other loans until you have had them for 2 years. So when starting out lets say we get one rental property with a conventional loan, do we have to wait 2 years to qualify for our second property if our income alone isn't enough? Please let me know what you guys think or what experiences you have had, either positive or negative. I really appreciate any and all advice.

[Craig Pfeifer]

I would use conventional financing as long as it is available.  Then you may have to be creative with your financing.  Possibly utilizing a heloc if you have equity in your current home, 401k loan, or partnering with other people.

[Enrique Reyes]

I have heard that on bigger pockets, however that depends on who you seek that loan through. I for example tried to get a loan with wellsfargo and I was told that he is allow to use projected rental income. So it really depends on the bank you seek the loan from.

[Brady Lee]

Does anyone in Utah have any experience with lenders that allow you to use the rental income when qualifying for a loan? What are the best types of loans for buy and holds? 

[William Hochstedler]

@Brady Lee

What you are talking about is called landlord seasoning. 

Some banks have been relaxing this requirement recently.  I haven't seen many with a 2 year requirement, but definitely two.

Also, I believe that if you owner occupy, many products allow you to apply the rental income immediately.

[Brady Lee]

@Craig Pfeifer why do you recommend using conventional loans for as long as possible? Is it just easier/cheaper than going other routes?

[Brady Lee]

@Brandon Turner what has been your experience on getting financing? What has been the easiest or best route for you? Sorry I know you're busy!

[Brandon Turner]

Hey @Brady Lee I love creative financing, and I laid my techniques in my book: http://biggerpockets.com/nomoney

Or you can check my posts on the BiggerPockets blog: http://biggerpockets.com/renewsblog . :)

[Craig Pfeifer]

@Brady Lee In my opinion, unless you can find the right partners, conventional financing is the cheapest and easiest.  Of course if you don't have the money for a down payment then you have to be more creative.  

[Talmadge Lawing]

that's been my experience. We have multiple rentals, all initially funded conventionally.   In order for me to show/claim that income for any new property loans I have had to show the 2year proof of those incomes.