AN had the best answer, talk to a mortgage professional. We have been procurring rental properties over the past year. Here is the criteria we have had to satisfy for our lender in order to get the loan.
– The downpayment has to come from seasoned funds in your account. If you want to get a loan from a relative then you will need to let that money sit in your bank account for at least 60 days, some lenders may require a longer amount of time.
– If you want you can put your relative on the loan application, then you will not need to worry about the seasoning.
– You will also need to show reserves. In our case we have had to show 6 months reserves for each property we have including our owner occupied home. That is we have had to show cash reserves for 6 months of payments for all of our rentals and our home which is absolutely absurd. (note our case may be out of the ordinary because we have several rentals, if this is your first it may not be as stringent with regards to reserves)
– You will have to make sure that your debt to income ratios are okay. This will be determined by the lender.
If you are looking for cash flow you better make darn sure you are doing your calculations properly. I am curious why you think you need to make a purchase in the 300k range to cash flow? Why not start with a small condo and you don’t need such a big nut to cash flow? Have you owned a rental property before? I am not trying to scare you out of it, I have seen plenty of posts on here that make rental property ownership seem like hell. For some maybe that has been the case, for me it has not been. Conversely it is not easy money and I vet out my tenants carefully and even with that I have had my issues before though they all have been resolved without courts or large losses on my part.
Personally I would feel very uncomfortable borrowing 75k from someone as a downpayment for a rental property. That is very nice of them. However I don’t like the way the numbers run. You have only 10k in cash? You guys make 145k which is awesome but why do you only have 10k in cash? Something is not adding up unless you have large investments somewhere else which is great if you do. Anyways, before I started making more property investments I would build up my cashpile for that rainy day in case something happened to that 145k/yr income flow. Then when I have 6 months to a years worth of savings socked away then perhaps invest. That is just me though and I am very risk averse. If you do wanna make a purchase maybe start small… you can always buy more!! Talk to a lender…
