All Forum Posts by: Paul M.

Looking to buy an investment property for around $110k. It's a 3-unit, located in NY's capital region.

I currently have an owner-occupied 3-family and my PITI is around $1610. Excellent credit. Good DTI; significant student loans, but payments on the loans are only around $200 on income-based repayment.

Have around $35k cash available and can take a loan from my defined-benefit pension for an additional $4,300. 

The issue I'm running into is I have around the right amount of cash right now, but reserve requirements are killing me because I'm looking at an additional $7-8k to close on top of what I have available based on most quotes I've gotten.

Does anybody know any no- or low-closing cost lenders I can turn to to get this deal done? Or ones that don't require reserves? I know the down payment alone on a 25% conventional will be around $27k... That doesn't leave me much wiggle room for closing costs when reserves are factored in.

Please let me know if you have any ideas or referrals. Thanks!

I am seeing a lot of articles out there talking about banks that offer loans on investment properties for less than 25%, in the ballpark of 20%. But I can't seem to actually find said banks. Does anybody have recommendations for banks that lend in NY that offer 20% or lower down payments on multifamily investment properties? The 25% plus the 6 months reserves required are killing me. Thanks, and I appreciate any input!

Hi @John Warren,

Thanks for your response... I wonder if I should have maybe posted this in a regional group to see if anybody knows of any local banks or credit unions in NY who would be willing to do the deal...

Unfortunately, my first home purchase (the 3-unit) was made late last year, so there's really no equity in the property yet for purposes of a HELOC. Don't have a 401(k). I have a pension I could borrow against, but I think it'd only be a few grand at this point (I'm early in my career).

Credit cards, I'd have to get cash advances at like 25%... And can you use a cash advance derived from credit card debt to finance a down payment like that? I thought banks frowned upon that...

Hi All,

Writing because I recently got into real estate... Last fall, I purchased a 3-unit multifamily and the experience so far has been excellent. As a result of the investment, I'm able to save money more aggressively, and I'm looking to get into more properties in my area.

I found a 3-unit nearby that's got amazing cash flow. I went to see it with my realtor before I bought my current place but we didn't ultimately pull the trigger because the price was higher then. It's at $85,000 now, and I might be able to talk them down a few thousand.

My problem is that, at the current moment, I don't have enough to do a 25% down payment on this property with closing costs... Bank said it'd run me almost $30k. I could probably do something closer to 5-10% down... All in, I think I have around $17,000 cash available.

Does anybody know of any financing options or NY banks/credit unions that would finance a 3-unit, non-owner-occupied property at around $85k with less than a 25% down payment? Thanks.

@Omar Cantu

TL;DR: Giving up the truck isn't the easy way out, as he's claimed, and experienced investors have agreed; it's actually the hard way. Once Omar understands this, he can get on the path to realizing his dream of real estate investing.

Omar, I apologize if any of this has been said already... I haven't been able to read all of the responses yet.

I think this is an excellent thread, and a lot of very useful advice has been coming to it from seasoned investors. I'm going to take a look at the truck thing from a different angle, and I'm hoping that my perspective might make a difference for you.

Throughout the thread, you've maintained multiple times that selling the truck is the "easy way out." Many investors have agreed that it's the easy way out and advised you to take it; others have said that taking the path of least resistance is simply a wise thing to do. They're right about the path of least resistance, but the reality about your truck is a little different.

You see, selling the truck is not the path of least resistance for you. Nor is it the "easy way out," as you've characterized it. In fact, that description of selling the truck is actually what's called "rationalizing." By calling it the easy way out and dismissing the suggestion, you're rationalizing and creating a justification for not dumping the truck. The reason that you're doing that, whether you know it or not, is because selling the truck is, in fact, the most difficult thing you could do right now. And by creating this narrative and image of, "I'm willing to do the hard work, there has to be another way... I will get through this!" you're deflecting from the hard work and the real steps that you know (after reading this thread) you have to take.

Indeed, the truck is a status symbol, a trophy that you've paid into, worked hard for, and want to hold onto. At this point, you've put so much blood and sweat into it already that to give up the truck is nearly inconceivable. The truck, for you, isn't just a truck... It's so much more, because at this point, the payments on the truck and the realities of DTI, down payments, available cash, etc. make the truck the most substantial and obvious barrier to your dreams. To sell the truck would represent true sacrifice, and it's exactly that kind of sacrifice that is a common thread running through the backstories of some of the world's most successful entrepreneurs.

The truck is a depreciating asset and a money vacuum. And it'll only get worse as it ages and the warranty runs out. A lot of seasoned and wise investors agree on this point, and these are well-read, experienced people who know what they're talking about. If the experts are all saying the same thing, well... You can do the hard work and make the sacrifice now, give up the comfort and the status symbol; or, you can continue with the way you're going, look back five years from now, and be in the exact same place you are today. By that time, the only differences will be that the truck will be older, have aesthetic/mechanical issues, be worth a lot less, and nobody will be excited by how it looks or drives. But you'll have at the very best, delayed your real estate investing dreams for it, or at the very worst, given up entirely.

Thanks everybody for all the great input! @Michael Cohen thanks especially for the advice on disputes; I knew previously that disputing in these scenarios is a very bad idea when you're in a limited time frame because lenders don't like open disputes, but I think that's great advice for others (who are in a similar situation) to see.

Does anybody have advice on what the best/most flexible loan products are for 4-units with a low down payment/low cash out of pocket? I've looked at a lot of them in recent months, but I find that usually when you get to 3-4 units, there are a lot of stipulations, reserve requirements, etc.

Hi Bigger Pockets Friends,

I'm writing for advice on financing because I just ran into a jam, and want to know what you all would do if you were in a similar situation. I've been following the Bigger Pockets forum for a couple months, and have been reading your advice on various topic, ranging from financing to assessing a property, to minor issues like how to find hardware for cabinetry. All of your advice has been incredible, and this appears to be a very well-read and experienced community. I found the forum after reading The Book on Rental Property Investing by Brandon Turner. 

So here's my issue-- I pre-qualified for a four-plex a couple months ago with a bank in NY. This property is a dream-- the rents are great (cap rate is good, etc.), I found great financing terms that will allow me to put 1% down due to a hybrid FHA/SONYMA loan called "FHA Plus," and the minor issues with the house, the seller has agreed to fix before close. Everything was right on track and the process was moving efficiently and according to plan.

Until today. The bank called me and I heard the originator on the other end of the line say, "I've honestly only had this happen a couple times in my career... It's a once in a blue moon kind of thing, and I hate making these calls." The automatic underwriting denied the loan. It turns out that a credit collections agency, unbeknownst to me, had placed a seriously delinquent collection on my credit accounts in the last month and it tanked my scores below the 680 threshold for FHA Plus that is used by M&T (the bank). I didn't know what this account was, so I asked the banker to give me the information from my credit report (I have Credit Karma, and this account has not showed up on Transunion or Equifax).

It was an old account from Geico that I owed around $80 on. I never received a notice, mailing, or call from the credit collector. I called the collector and asked them how this could have happened, and they let me know that they did send out a mailing (to an address that I have not lived at for over 2 years). So, given that they sent it to the wrong address, they agreed to delete the account from my credit reports if I paid in full. I paid in full over the phone.

Apparently they notify the credit bureaus within a week, and the credit bureaus can take a month to delete the information. The bank says they don't know if this will improve the score enough to get me the mortgage, but they will try to contact the credit bureaus to re-score in a week.

I also have the problem that the contract specifies that we have to close by around July 20. I know FHA loans can take like 45 days to 2 months. I can't afford a loan with a larger down payment because the sale price (around $250k) would put me outside my reserves and cash on hand amount.

Is there anything I can do here? I was totally blindsided and I don't know if I have any recourse or way to expedite things so that the bank can re-score and get my credit scores back to what they were when they initially prequalified me. Is there any way I can compel the credit collections firm to do this faster, given that they didn't provide proper notice, and the delay could cause me to lose the house?

Thank you Bigger Pockets experts, and I appreciate any advice you can give on down payment options, recourse, creative financing, etc. I have a great job that I've had for over two years and other than this, my credit scores are good and I always pay on time. My student loan payments are low too (income-based).

Best of luck to all the rest of you in your investing!