Second property

[Ian Davis]

How do you finance a second property when you're on a fixed income? And I can't use my FHA/VA, because for those loans I have to live in the property. Is conventional the only way to go? There's a second property I'm interested in, but I don't know how to finance it. How do all you investors get banks to allow you to carry several mortgages? I'm confused here.

[Jacob Sampson]

Originally posted by @Ian Davis:

Jacob, great post. But what type of loan products should an REI use? What are some of the more legitimate, often used, loan types for subsequent properties? Conventional? HELOC? I just want to develop a strategy going forward. If I'm going to create leverage I need to know the steps I need to take in order to create it. Thanks.

Good point. I do all 20% down using conventional loans for my purchases. I haven't ever had a bank tell me they wouldn't loan on a reasonable rental when I'm putting 20% down. I guess they do want to see that I have sufficient reserves, but I just show them I have a 30K on a HELOC available for emergencies.

I have also used my HELOC to come up with a portion of the down payment, also. I'm pretty boring and don't get too fancy or creative.