What to bring to a lender?

Question

Hi all.

I'm currently looking for financing for my first income property and I was curious to know what I should bring to the lender to help persuade him/her. I have run all my interests through the buy and hold calculator and I also have numbers run by my Realtor. My realtor suggested that he and I sit with prospective lenders so that we could run through a few scenarios together. Aside from my personal financial balance sheet and my pdf's, are there any recommendations as to what I should prepare for?

I'm also having an issue with financing because I'm currently an unemployed student.

Eric Grant · Answer

I understand the concern of not having income and the questions that I've read seem to concern the money, so I'll start by answering the questions asked.

We have a reserve of $70,000 though I'd like to keep about 20 set aside.

My credit score is 765

I do get some income from the military, just not a lot.

I have zero debt aside from my personal home.

I have a background in construction so working with a partner would be perfect for me but I have a lot of networking to do because I left for so long and don't really know anybody around here.

I've basically limited myself to properties at $160,000 or less due to not wanting to put more than $40,000 down knowing that I'm likely going to have to put 25% down with local banks.

@Joseph Sherer I'm not stuck using a realtor but I thought that it would be helpful to use his access and I like to compare the numbers that he arrives at to my own.

@Jordan Decuir I should have clarified that I'm an older student lol. I'm 36, so I too wish I had learned and started much sooner, but then I probably would have lost my shirt in 08"

Thanks for the responses everybody. I'm hoping to sit down with w a few people this week, or start sending in some resumes.

Wayne Brooks · Answer

A traditional mortgage from  regular lender (FHA, conventional)?  No job equals no loan.  But to answer your question, what they'll need from you to start; last two years tax returns, last two months bank statements, last 3 pay stubs.

Jordan Decuir · Answer

I love where your head is @Eric Grant

I wish that I would have started getting the ball rolling when I was a student. It's never too early to learn. Since you have no steady income maybe consider partnering with someone that DOES have stable employment that is looking to invest. You can provide a lot of the "work" and this partner could be more of a provider of capital, either through providing cash for deals or using their borrowing capacity to borrow a majority if the capital for a deal. Good luck to you and I bet that you can find lots of great examples of what your available alertnatives are right here on BP

Henri Meli · Answer

If you don't have a job, how are you planning to make ends meet, if tough times were to come along after you close the deal? Let's say you don't find tenants for a while, or the property needs some serious repairs? How do u plan to deal with this? Have you thought about dealing with worse case scenarios, once you own the property?

John Ching · Answer

Eric,

I'm assuming you are using hard money. Obviously, being an unemployed student doesn't give you a chance in hell of going conventional?

Using hard money, the lender is really loaning on the equity of the property. Without a job, I hope you have a good FICO score. Without a job, a good FICO will at least tell the lender you can manage credit.

How do you plan on paying for the property? What sort of cash reserves do you have? Where will you come up with the monthly payment? This are the things a lender is going to want to see.

Joseph Sherer · Answer

@Eric Grant

Great time to start investing.  This will be difficult without an income because banks depend so heavily on debt to income ratios.  If I may, let me ask a couple questions. Feel free to answer them on here or simply consider them.

• How much do you have to put down?
• Do you have any deals lined up?
• Are you stuck on using a realtor?

You can occasionally find deals worth purchasing on MLS but the deals off MLS usually yield better returns.  When you approach lenders, you will likely find better luck with smaller, more local banks.  If you find a good enough deal, you could JV with someone else or use hard money to finance the property.  Keep going to banks until you find someone that will hear you out.  Don't be discouraged when banks tell you no.  Use that as an experience to improve your presentation to the next bank.  Best of luck.