Do I Need Good Income To Make A Multi Purchase?
I have a good job, but I am going to take some time off fairly soon. I want to invest in some property, but my question is: can I get financing after quitting or do I need to buy now while I am still employeed with good income?
I have v.good credit. I have good amount of liquid assets.
If I don't need a job, what's to stop any body working at Walmart with good credit and $100k from buying a $700k 10-unit building? Nothing?
Thanks for helping the clueless,
-J[ Edited by JonDoe on Date 01/15/2004 ]
THERE ARE MANY TYPES OF LOANS. FULL DOCUMENTION: W2'S PAYSTUBS, ASSETS, NO DOC ANYONE WITH GOOD CREDIT CAN GET THESE(EVEN WALMART EMPLOYEES) STATED INCOME: JUST STATE INCOME. LOANS ARE BASED ON A NUMBER OF FACTORS. THE APPLICANTS INFORMATION GOES THROUGH AN UNDERWRITING ENGINE DEVISED BY FREEDIE MAC AND FANNIE MAE. IT IS BASED ON CREDIT HISTORY AND CREDIT DEPTH. A PERSON WITH A 750 MIDDLE CREDIT SCORE AND HAS ONLY A MORTGAGE PAYMENT FOR THREE YEARS WITH NO LATES IS MORE OF A RISK THAN SOMEONE WITH A 650 MIDDLE CREDIT SCORE NO MORTGAGE AND 5 OPEN TRADELINES NEVER LATE FOR THE LAST SEVEN YEARS. I JUST GOT A LOAN APPROVED FOR A CONTRACTOR FOR 75%LTV WITH A 729 CREDIT SCORE WHO WANTS TO BUY A HOUSE I'M SELLING FOR $93,000.00. I ALSO GOT A WAITRESS AT A BAR APPROVED FOR THE SAME HOUSE FOR 80%LTV WITH A 629 MIDDLE CREDIT SCORE. THE DIFFERENCE IN THE APPLICATIONS WAS THAT THE WAITRESS HAD 3 MORE OPEN CREDIT LINES. THEY BOTH HAD THE EXACT SAME AMOUNT OF MONEY IN THE BANK. THEY BOTH GOT THE SAME INTEREST RATE. FINANCING IS A FUNNY THING BUT I LOVE DOING IT. IT NEVER CEASES TO AMAZE ME. LORI
i can't seem to pick out the information i am looking for from your answer, tinman. so let me refrase me question:
Looking only at traditional loans from banks (let's say a 30-year fixed since I like the idea of locking in on 40-year-low interest rates for another 30-years).
Let's say I wanted to buy a 10-unit townhouse/apartment building for $500k and I have enought cash to put down anywhere from 0-30%. Now let's say the bank is also happy with the property's numbers (I'm not exactly sure what they look at, but let's just say they are happy.). Let's also say my credit is very good.
Now....
How would the following scenerios effect my ability to get the loan and at what rate / terms:
--I'm unemployed (this is one I'm most curious about)
--I have $500k cash/equities in the bank
--I have little in the bank except for my downpayment.
Again, I only care about traditional lender for 30-year fixed in this discussion.
thanks again for any help.
-J
Your credit is very good. Do you know a number? Verty good for some people could be 650, others 750.
The other thing you must consider when you are buying an income producing property is that the bank will take into account that income. So you aren't totally in the cold as far as income is concerned. If the property already has tenants and you can provide that to the bank it is much easier.
Runman-- Let's say 750 for sake of discussion.
BOSSinDC-- Yep, I know this. That is what I meant when I said the bank is happy with the 'numbers' on the property.
It is possible to get the loan without a job. That said, it would be best to buy before you quit. More strength and stability. Unless you have years of experience and a proven track record in the arena in which you are pursuing.
Good Luck,
Shawn(OH)
Totally agree, buy it while you are still employed. You may still get it if not employed but I bet you would get a better interest rate before you quit.
Ability to pay is the question. All lenders are going to look at your credit AND your ability to pay.
Without a job you will need something else to qualify.
About Wallmart and 100k. Not many people who make 8 dollars an hour can or have saved 100k. So im guessing your question is more geared to asking if a job is the #1 criteria. the answer is no. if you have a credit history and a score that is so solid then you can get a stated income loan or no DOC.
[addsig]
Tradional lending is only good for the TRADITONAL PEOPLE, In my experience of financing of investors, eventually they become non-traditional. the only way to stay traditional is to work at a job where you can debt ratio all your bills with your salary. That would mean your investment properties are truly for retirement purposes. This is very hard to do for most people but it can be done. If you like you can call me. Based on what you want as far as financing and what you want as far as work doesn't equal to TRADITIONAL. lori
Banks like people who have a real j.o.b.-just over broke. It will be easier to get financing while you still have your job,plus you will probably get a better interest rate by having a job.
Let me introduce myself.
I'm 27, no job, good credit, not much money, and I have a 24 unit complex.
Yes it can be done. There are 4 things that make it easy to get commercial loans.
1. Good Income
2. Good Credit
3. Cash
4. Good property (numbers make sense....say cap of 10% or more)
As you take away each one of those it gets a bit more complicated...not impossible, just more complicated, especially through traditional channels.
Keep in mind, Commercial financing is TOTALLY DIFFERENT from residential financing. In residential financing they tell you how much YOU can borrow based on you, and THEN ask what you're buying. In the commercial world, they look FIRST at the project and how much income it will produce. If they think it will support itself, THEN they'll look at you to make sure that you're going to be competent with their money.
In some ways it's easier to get a commercial loan, because a great property will make up for a lot of things.
If you've got 25% to put down, decent credit, and a great property, you should be able to get it financed. Keep in mind, not everyone will lend to you, but you'll be able to find a lender that will work with you.
30 year fixed rates will almost never come from a bank. Banks will want to do 15-25 years, and usually a balloon (or re-evaluation) at 5-15 years.
As for the Walmart employees....they were making more than I was when I purchased my property. There is nothing to stop them, or you, from purchasing that type of property. You just need to figure out where the holes are in your equasion, and systematically take care of them.
I know of several lenders that will do a 30 year term on a multi-family property, and also have access to a lender that will do a stated income/stated asset loan for multi-family. Look at my profile and contact me if you are interested.