Seeking financing-where do I start???

Question

Darryl Dahlen · Answer

A bank is going to want to see 2 years in the same job field as far as your personal income goes. As to the loan, here is what you'll want before going to talk to a bank:

On you:

• 2 years tax returns
• PFS
• 2 months bank statements
• Your bio/resume that outlines your real estate experience

The property:

• Offering memorandum/flyer
• YTD P&L
• YTD Rent Roll or at least the past 3 months
• 2 years income and expense-ideally
• Photos
• List of any work done or any needed work and estimated cost to cure
• Bio/resume of property management company you plan to use

The more you take into the bank the better feedback they can give you as to what they can do. If the property is local to you, or the property you own, you may be able to see about them using the equity in your current property. You'll likely need 20-25% down, need to show 6-12 months of PI liquid reserves post closing, and meet their internal guidelines with regards the DSCR and global debt service.

Stephanie P. · Answer

Hey Kayla,

Just a few things about the property you're trying to finance.

If it's a 5 unit property, it won't qualify for regular residential financing because it's got more than 4 units.  It's considered a commercial building and as such will require commercial financing.

However...

You could take cash out of the two properties you paid cash for either with a regular cash out refinance or a HELOC and use that cash to finance the purchase.  That might not be palatable to you (many people don't like to encumber their primary residences for business purposes), but it's an option.

I don't know your debt load (probably minimal considering you paid cash for two properties) or your income (I feel that's where you're going to run into problems with regular commercial financing considering you've got a new job and the husband as a 1099).

I just sent you a colleague request.  I may be able to help further.  I look forward to hearing from you.

Stephanie