Financing a Rental Property

[Jeb Vachuska]

I recently had an offer accepted for my first rental property. Its a duplex outside Milwaukee WI which would cash flow about $600/month. After putting $2500.00 in Ernest Money down and being pre approved for a traditional 30 year loan (which I used to run all the numbers) I was advised the residence was not able to be purchased by a traditional loan. The reason for this is it was purchased by a wholesaler, which in turn sold it to another wholesaler who then wants to sell it to me. I reached out to multiple banks and was advised they could not start the loan process until the actual seller (Second Wholesaler) had the title to the residence. 

In talking to my agent, who has been very helpful, suggest hard money or a commercial loan. As I have never purchased a rental property before, and just purchased my first residence in June, I was wondering if there were any other ideas for the financing of this property. Hope I included all information needed and thanks in advance for the help. 

[Rebecca Knox]

Hi @Jeb Vachuska

Yes, the issue is "I reached out to multiple banks and was advised they could not start the loan process until the actual seller (Second Wholesaler) had the title to the residence."

You would need to use hard money but the deal would need to account for the cost of that money while you finance in to a traditional loan and after running your numbers and including those costs, it may no longer be a deal. 

Otherwise, the wholesalers would need to restructure the deal to accommodate for your financing.