Buying fourplex unit

[Lydia Woods]

My plan is to buy a fourplex in 2020. I have rental properties I was fortune enough to pay cash for and also repairs. I have one that will be finish in March and that will it. In 2019 I’m getting somethings in order with financials and credit. My credit is not bad but going to work on getting it close to or 800 as possible. All that to say, I know I will need to take a loan out to purchase the fourplex. And it is usually harder to get an investment loan. Any advice on what I should do to increase credit score? What do the banks look at when deciding to approve? Would it help to put a property up for collateral? What happens if I do? Any other recommendations are welcomed. Thank you

[Greg Miller]

Actually, it is not harder to get an investment loan.  You just have to find a local banker that works with real estate investors.  These banks are out there...you just have to find them.  Your credit score is based on:  35% payment history, 30% amount owed, 15% history length, 10% new credit, and 10% types of credit used.  Therefore, keep paying everything on time and have a low balance vs. credit allowed.  In past few years, I have been asked for financial position, W2 pay stub, 60 day bank account balance, and federal tax return.  Ask the bank what you an use as a down payment.  Since you paid cash for your rental properties, then the bank would take a first lean holder position.  Therefore, you are using your rental property equity as collateral.  Another way is to refinance your paid for properties and take the cashed out money for the down payment for the fourplex. 

Good luck in red stick country!