Getting loans from the bank

[Joy Baker]

When you take out a loan from the bank for a real estate investment ( for ex. a multi-family home) and you decide to buy and hold. Are you the investor paying for the loan or does the tenant you put in the rental property? How do you keep out of debt if your rental is vacant. How long does it take to payoff  a bank loan?

[Frank Chin]

When you take out a loan to buy an investment property, or for any other business, you as the borrower are totally responsible, not your tenants, not your customers. That is why it is recommended that you keep at least 6 months or cash reserves on hand for emergencies, such as a vacancies.

We normally don't have extended vacancies. But a few years ago, I had a stroke, my wife handled the rentals, and last fall, she suffered pesticide poisoning, was hospitalized, and out of commission for six months. As we owned rental for many years, the mortgage was paid off, and we knew who to call to get things down. And this is the first time that we had to think of six month reserves, as the rental was vacant for six months.

The vacancy is a SFR, and who will be paying the bills in the meantime but the owner. The others we had are triplexes and duplexes, and with a few or them, we have enough rents to carry through vacancies,