How To Get Mortgage on 2nd Investment Property?

[Craig S.]

Hello All,

I am currently in the process of buying my first rental OO property -- a duplex that I will live in one half and rent out the other side. I am using FHA financing.

My ultimate goal is to quickly build as many investment rental properties (multi-family then on to apartments). My duplex mortgage application has been submitted and now it's just a waiting game on the 1st property.

Now I am starting to think about my 2nd property. I am self employed and had just enough income to qualify for my 1st mortgage on this duplex. So, I am wondering what is the best way to qualify for a mortgage on my 2nd property?? -- probably a 2 to 4 unit property. Next year I forecast that I will make about double the $$ (on paper) that I made this year. My expenses will be much less, revenue higher, and therefore net income higher.

1) Will I still have to qualify for my 2nd property using my same amount of current income (for this year) as reported on my taxes? If I had just enough income to qualify for my 1st property, how can I qualify for a 2nd property this year, or will I have to wait until next year's tax returns are much higher? (This is all assuming traditional financing, no owner financing, etc.)

2) Can banks use the rental income on the 2nd property (probably non-owner occupied) to help financially qualify for the 2nd property? If yes, what percent of the current rental income can they use -- 75%??

3) When I move on to my 3rd investment property, when and will they use my rental income from my 1st and 2nd properties that I already have to help qualify for the 3rd loan?

I am confused about what income banks will use in determining my worthiness to qualify for my 2nd, 3rd, 4th...... investment properties/mortgages.

Obviously not many people have enough income (not from rentals) to qualify for 5 or 10 properties. When and how much of the income from current rental properties can banks use to qualify for your 5th home, etc?

Please help!

Thanks,
Craig