Will I be eligible for financing?

Question

Mark Langdon · Answer

Contact lenders and they will tell you if you will qualify. Plain and simple. If you do sign up for a 5 year lease make sure you have automatic rent increases in it ahead of time spelled out in the lease. It could work out real well if they are very good tenants or it could be really hard to get rid of them if they are bad tenants so be careful.

Chris Mason · Answer

Hi @Ned Micic,

Yup, departing residence rent can be counted as long as no lender-specific overlays are at work.

James Bowie · Answer

@Ned Micic Banks and hard money lenders will always like to see a lease in place when evaluating creditworthiness of a borrower.

In today's lending environment, the question is less "can I get financing" and more "what will my financing cost"? Start by asking the bank that you have a relationship with if they would consider loaning on your property. Next, talk to some local credit unions as they can often be a good source of funds.

Take time, talk to as many lenders as you can, and do your homework. You will get the best rates from a conventional "bank" - but hard money lenders can also provide shorter term capital at a higher rate of interest.

Don't be afraid to start calling around to local banks/credit unions and asking questions. I think you'll find that once you talk to a few people, you can start comparing their answers to decide who you want to trust with your business. Just make sure to do your homework - even if the first lender you talk to sounds like he's got the best deal in town, make sure and talk to 3 others just to verify it's true. Unfortunately I've found there is no substitute for good old fashioned due diligence.

Good Luck!