Hi Francisco, You have to have an income to qualify for a loan. Or you can find a business partner that will qualify for that loan and you both manage the investment.

Wed May 21 2008, 22:51

If you have an income then the answer is yes.....

Sun May 18 2008, 20:19

The other advice below is good. I assume that you're expecting the income from the other units to cover all the expenses and produce some positive cash flow. And that is possible. However, I don't think you have much of a shot at convincing a bank to loan you the money. Let's see: You'll be a student with an admitted income of almost nothing. You probably don't have experience in owning or managing an apartment building (or else you wouldn't need to ask your questions here). If the apartment is in foreclosure, likely it wasn't generating enough income to cover expenses. And commercial properties are judged on that basis--actually, either cap rate or cash-on-cash return. But if it wasn't producing a positive return for the previous owner, who probably knew something about apartment buildings, why would a bank trust that you'd know how to turn red ink into black?

There are, of course, a number of ways to buy an apartment building without getting a mortgage from a bank. Basically, you need owner financing. (And that means no foreclosures. You're actually looking for a cash cow--actual or potential--with a tired or motivated seller.) You're looking for something that is producing some cash flow now, but could produce a lot more if some simple steps were taken. For instance, maybe the rents could be raised--that's the most obvious. Or if there's a potential for a laundry area, or the laundry area isn't being maximized. Maybe there's rentable storage space in the building. And the list goes on and on.

There are a number of ways to negotiate seller financing. The most obvious is simply for the seller to hold the mortgage. Your pitch is: "You're tired of managing this building. Sell it to me. I'll pay you every month, and you'll get an 8% return [or whatever mortgage interest rate you two agree on] with no work. That's an 8% cap rate, far higher than you've probably been getting when you've managed the property yourself."

Just know what you're getting into. And check not only the seller's books but also his 1040s for the past couple of years. People may overstate income on their books, but you can bet they don't overstate income when it comes to filing taxes.

Hope that helps.

Fri May 16 2008, 19:20

Franscisco,

What I would say is, that in my proessional experience in your situation you would most likely need to have verifiable income. I do not know of that many no-documentation programs in the mortgage world today that would allow you to purchase a house. Without putting 20% more down if not more, maybe some hard-money lenders but I think it would be difficult. Simply because I do not specialize in those types of loans. My next question would be if you are not making any income, how do you plan on paying for a mortgage? In your situation I believe any bank would not be willing to lend money on a mortgage to someone who has no verifiable income as you stated, especially if this is an investment property.

On the other hand, if you have a contract with a company and are a college graduate, that is a different story. But im really curious to know how you expect to pay for a mortgage with out making any income? Unless you have outstanding assets and do not want to pay cash for the property.

Good Luck!

Brent Bester
Mortgage Professional
614-622-8916
bbester@usavingsbank.com

Fri May 16 2008, 17:32

Francisco: If you have significant assets, this could qualify you for a loan. Another consideration might be to have your parents or another relative, who does have income, go in with you on the purchase. Some lenders might look to any scholarships, which are allocated towards housing, as income. Unfortuantely, or fortunately, depending on your point of view, people with no income can no longer qualify for 100% financing.

Fri May 16 2008, 17:30