How to Invest in a Property - No Money Down

[Hannah Howe]

If we could prove a MLS listing has positive cash flow already, would we be able to obtain a conventional loan with no money down or a smaller percentage down payment?

[Andrew Syrios]

Quote from @Hannah Howe:

Quote from @Andrew Syrios:

No, no bank will lend at appraised value upon purchase. They will only lend on your costs up front and usually for at least 6 months after purchasing. They also won't ever lend more because of it's cash flow. They might restrict how much they lend to you if the property doesn't cash flow well enough. But the appraised value is what they will lend on based on comps (houses) or cap rate (apartments). But again, up front they will only lend based on your purchase price/cost to rehab (unless the appraisal is lower or DSCR isn't enough, in which case they would lend even less).

That is good to know @Andrew Syrios. I was wondering if traditional banks would lend rehab costs on top of purchase price. Thank you for the explanation. Why would they lend for at least 6 months after purchasing? Is that for the time the property is in rehab?  

 They will (at least many will) but they will escrow the rehab portion of the loan and only release it as you provide invoices and proof the work was done.