First Time Investors Have Significant Obstacles!

Even at a time when interest rates and home prices are at historic lows, the opportunity for hard working, fully employed people to purchase their first multi family property as investors may not be achievable.

Except for the new investor with high credit scores and lots of cash for a down payment and reserves, tighter bank regulations have all but killed the American Dream and entrepreneurial spirit of newcomers to this investment arena.

Here are some of the things you can expect when you apply for a loan. First of all companies are no longer issuing mortgage insurance on investment properties. That means down payment requirements are 20 % or even higher.  Credit scores need must be above 700 and you must have cash reserves. Many loans have pricing adjustments added to the interest rates and on top of that expect to pay points. Lenders are looking for investment experience, so if you are new to the game all your other loan criteria must be very, very strong.  However, a lender will consider up to 70% of the rental income towards qualifying a buyer. Whew!

Prudent investment policy for lenders or missed opportunity?  We have gone from lending money to anyone with a heart beat to trying to create the perfect no risk loan. This at a time when we need to create jobs to get this economy of ours back on track.