# Qualifying for a mortgage



## dom44 (Aug 16, 2012)

Hi,

I am looking to purchase a few income properties. I have about $200,000 saved to do this. Now I could simply purchase a single house for the $200,000 and rent it out.
But what I want to do is purchase several houses by using the $200,000 as down payments. What I would do is calculate my expected income from rentals and then put down a large enough down payment on the house so that my mortgage would be less than my rental income.

The problem is, I have retired and have no income. (no company pension either). So how could I qualify for a mortgage to do something like this?

Any suggestions?

Thank you


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## Ethan (Aug 8, 2010)

You could start a corporation to do this, then have the bank lend you money on the appraised values of the properties, as opposed to your income. The banks will only lend up to ~80% of the appraised value, so you will still need to make a ~20% downpayment per property.


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## Andrej (Feb 25, 2010)

Ethan said:


> You could start a corporation to do this, then have the bank lend you money on the appraised values of the properties, as opposed to your income. The banks will only lend up to ~80% of the appraised value, so you will still need to make a ~20% downpayment per property.


I don't think you need to start a corporation to do this.


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## sags (May 15, 2010)

I doubt you will qualify for any kind of mortgage with no income.


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## carverman (Nov 8, 2010)

Ethan said:


> You could start a corporation to do this, then have the bank lend you money on the appraised values of the properties, as opposed to your income. The banks will only lend up to ~80% of the appraised value, so you will still need to make a ~20% downpayment per property.


Several issues come to mind:

Being retired and with no real income..he's SOL as far as getting the banks to listen to any of his "business" plans.

The $200K won't go very far when if he's thinking of buying more than one property.

A $250K house would require 20% down, + appraisal fee + inspection fee + legal closing costs+ land transfer tax even before he can take over the title..that's another $10K eaten up out of the $200k savings..so that would be at least $60k right off the top.

But..the big problem again is having no income..as owner of each house, he would be responsible for paying the mortgage and property taxes to the bank.
How is he going to do that..when he's out of money and practically bankrupt already? 

You can't always count on the tenants to pay their rent, so he would have to have other sources of income..otherwise if he fails to pay his mortgage installment once or twice, the bank forecloses on him, property goes to power of sale, (sometimes at much cheaper market prices than what
he originally paid and mortgaged. And the bank sues him for any balance outstanding!
and his $200K vaporizes!..end of technicolor dream of being a wealthy landlord.


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## Just a Guy (Mar 27, 2012)

When I started buying properties, I was self/unemployed. No standard income according to the banks. There are ways to get a bank to lend you money. 

What I see as your real problem is that you have no clue when it comes to finding a good rental property. If you're looking into, as some suggest a 250k property, then paying it down until it cash flows then you are probably going to lose. 

If, on the other hand, you pick up a cheap property (like a 65k 2 bed apartment that was in foreclosure) in a good downtown location close to a university, which can rent for upwards of $1100/month (includes heat and water). If you paid cash for it, waited six months, then applied for a mortgage, you may find that the appraised value is high enough that, even with the bank wanting a 35% downpayment (a bank will grant almost anyone a mortgage at 50% LTV), you may find yourself near a 100% financing (as the appraised value was higher than what you purchased it). 

Now, before the naysayers out there say it can't be done, this is a real example that closed just a few months back, not in Toronto, but in Alberta (sometimes it helps to look outside your area if you don't live in the right place) They aren't common, but I've seen about 3 similar lately. 

Picking the right property, and having the patience to find it, is the key.


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## fergusonsd (Dec 30, 2012)

You need to keep in mind that banks will include your rental income as qualifying income for a mortgage. What you need to do Dom is seek out a quality mortgage broker because getting financing for multiple rental properties can be very challenging. Not to advertise myself but I run a website which specializes in getting started as a real estate investor and it also provides the names of some of the people I have worked with in the past because having a good team can make all the difference. Check it out if you would like more information.

www.fergusonfinancial.ca 

You can then navigate to the section called Your Real Estate Team to read more about mortgage brokers.

Hope this helps.

Devon


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## sags (May 15, 2010)

Even with the rental income calculated in...............the mortgage to income ratio would be close to 100%.


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## Saniokca (Sep 5, 2009)

fergusonsd said:


> Not to advertise myself but I...


Lol


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## Berubeland (Sep 6, 2009)

Just a Guy said:


> When I started buying properties, I was self/unemployed. No standard income according to the banks. There are ways to get a bank to lend you money.
> 
> What I see as your real problem is that you have no clue when it comes to finding a good rental property. If you're looking into, as some suggest a 250k property, then paying it down until it cash flows then you are probably going to lose.
> 
> ...


Proof or it didn't happen. 

Did I tell everyone about the beautiful unicorn I saw out my front window this morning? It was farting the most colourful rainbows as it's propulsion. Who knew that unicorn propulsion smelled like fresh mountain wildflowers? Then I saw three more. We should start a unicorn farm...this is how it works, send me some money and we'll start a corporation (LLC) in Arizona and we'll use that to avoid lawsuits and liability. Just go check out my website you'repoorernowdumbass.com for the details of how to buy my ebook on unicorn farming. 

You should have income to buy a property. Some crooked mortgage broker will be very happy to help you buy a place or two. They will have to do some falsifying of information but who cares about little things like the law and common sense when you can buy real estate.


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## Cal (Jun 17, 2009)

How many properties would you like to buy, how much do you expect to get in rents from them? After insurance, expenses are paid, what type of return do you expect to make on your $200,000 at year end?


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