if a property has monthly rent to pay for the monthly note , will lenders lend me money to buy it?

Asked by Jimmy, District of Columbia Tue Apr 8, 2008

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Don Tepper, Agent, Burke, VA
Tue Apr 8, 2008
Not on that basis alone. Lenders will lend money either on (1) your ability to pay (based largely on your income and credit), or (2) equity in the property. You'd be looking at the first option; your position would be that the monthly rent would cover the mortgage.

However, lenders will discount your projected rent (that is, the fair market rent) for the property by 25%. So, if all expenses (PITI, condo fee, etc.) come to $1,500, a lender would want to see a lease showing someone's paying $2,000 a month.

Second issue: You're talking about an investment loan. Your interest rate will be somewhat higher, and lenders in general will want you to put more money down; they'll want more equity in the property than if it were your primary residence. That's certainly possible, but may make the purchase more expensive than you initially calculated.

But, if you've got the money to put down, are willing to pay a somewhat higher interest rate, and can keep the expenses to 75% of the rental income, you can probably do it.

In the D.C. area, some investors are finding cash flow properties in Prince William County--Woodbridge and surrounding areas. They're buying foreclosures--3/2s or larger--for as low as $110,000--without much money out of pocket.

Hope that helps.
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James Reusing, , Baltimore, MD
Fri Apr 11, 2008
there are tons of banks all over the country that do different things with their money. some of the more conservative banks may not loan you the money but as long as you can prove that you are receiving income then it should not be too hard to get this loan to go through. i am a loan officer in baltimore and would be happy to take a look at all of the details for you, and see just what kind of deal i can get. I work with over 120 lenders and i know of a few off hand that will allow you to purchase this property even if you have some credit issues.
-James Reusing
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