5/21/2008
1
FINANCING INVESTMENT PROPERTY
BIX E
it M
t I
qu y anagemen , nc.
RAFFI SOGHOMONIAN
Mortgage Broker
Registered Investment Advisor
Residential vs. Commercial
COMMERCIAL 5 U i
(M l i F
il )
+ n ts
u t am y
Mixed Use (Retail, Office or Warehouse)
MUST
h fl
d b
i
cas ow to support e t serv ce
Lender may reduce Loan Amount
5/21/2008
2
Available Commercial Loans
Most are Amortized over 30yrs (Due in 15)
3, 5, 7 & 10 Year Fixed (Few 30yr Fixed)
Some have interest only features
Almost ALL have prepayment penalties
Residential vs. Commercial
RESIDENTIAL – 1 to 4 units
Single Family Homes
Condos
Duplex, Triplex & Fourplex
Borrower(s) MUST show ability to repay
NO FHA for Investors
5/21/2008
3
New Conforming Limits
High Cost Areas – Limits up to $729,000
Owner Occupied ONLY
(NO Investment Property)
1 Unit only (Condos are OK)
Full Documentation Only
Investment Property Loans
Full Documentation
Higher Loan to Values
Up to 90% on Conforming loans (MI)
Stated Income Loans available up to 80% LTV
5/21/2008
4
Declining Markets
• For Most Lenders ALL of California
• Automatically deduct 5% off value
Investment Property Loans
Most Lenders will NOT allow more than 10 Properties
What are the options?
Spouse (10 properties each)
Family or Other Investors
Local Bank
Hard Money
5/21/2008
5
Documentation
– Full DOC (Provide income documentation)
– Stated Income (Still available in some cases)
– Standard Conforming limits
< $417,000 = easier guidelines
Full Documentation = higher loan to values
Debt to Income Ratios
ADD:
PITI (principal, interest, taxes & insurance)
Minimum Payment for all Revolving Debt
75% of Rental Income less PITI
Divide all your expenses by Gross Income
Should NOT exceed 40-45%
5/21/2008
6
Employment History
Standard Underwriting requires
– 2 Years Continuous Employment
– Must be in the same line of work
– Commission, Bonuses & Self Employment
Income are averaged over two year period
Non-Occupant Co-Borrower
Automatically treats the loan as an
Investment Property