Credit score and rental property purchses

[Dave Vona]

I'm looking into buying 2-4 SFR turnkey properties over the course of 2017. I currently have a credit score close to 800 but wasn't sure if the purchase of each property would lower my score. I didn't have a an exact timeframe for buying these but it could be in quick succession. I was wondering if I should spread out these purchases over a longer period of time so my credit score doesn't drop and make the purchases more difficult. Does anyone have any experience with this? Thanks.

[Anton Ivanov]

@Dave Vona

I purchased 4 properties with financing in the span of about 10 months and didn't see a significant drop in my credit score. The only thing that will possibly affect it is the number of inquiries, since each time you finance, you'll get 1 or 2 added to your credit profile. In my experience, the effect of this is minor and your score will get back up (if it does slightly drop) in a matter of a few months.

Aside from credit score, you need to keep track of your debt to income ratio, because that's what will really affect your ability to get new mortgages if you're using conventional financing. If every property you purchase cash flows, it's not a problem, but if your debt service (mortgage payments) keep increasing, but your income does not, your debt to income ratio will go up. Most conventional lenders will not lend if your debt to income is over 45%.

Hope this answers your question!