Quitting Your Job Using Rental Properties - Day 1

2/9/16  Monday
    I had been researching, thinking, and contemplating getting into real estate for a couple of years now.  My parents own rental property, my wife's parents own rental property, so it just seemed natural for us to follow.  Yesterday, I took the first step.  I contacted a couple of bank mortgage officers to get pre-qualified to buy a rental property. 
     The first person I contacted was an on-line banker who works for the bank that I currently have my checking and savings accounts with.  It is a small bank, so the nearest mortgage banker is at their corporate headquarters 400 miles away.  Anyway, she emailed me a form to fill out, which I did.  I have not heard back from her.  I will update on future blogs when I do.
     The second person that I contacted was a local banker, we'll call him Hank, who works for the same bank that loaned me the money to purchase my primary residence back in 2009.  I was able to reach him by phone and got better response.  Hank asked me a few questions to estimate my income, debt, and assets.  He also asked me some standard questions which you can find here.  Then he asked for my SS# to check my credit, which I expected he would do, so it wasn't a problem.  The problem was after Hank checked my credit.  I knew there were some bad marks on there.  I had been monitoring my credit for about a year through Experian, in anticipation of this day.  Experian said my credit score was a 690.  A little low I thought, but I had no doubt that I would be able to raise it over 700 before the time came to purchase, so I was ok with it.  To my surprise, when Hank called me back, he said my FICO scores ranged from 640-670-690, and they have to use the middle one.  I may need to do a little more work on my credit before I proceed.  I will find out soon and let you know on a future blog.  So, my advice would be to know ALL 3 of your credit scores before you contact a banker.  You probably already know that the higher your credit score is, the lower your interest rates will be, or possibly less money to put down up front. 
     After explaining over the phone the reason for some of the delinquent items on my credit report that have or have not been cleared up, Hank sent me an email in which he requested hard proof of some of the things I estimated during our very first phone conversation.  Below is a list of what he wanted:

• Copy of the last (2) years tax returns along with copies of all W-2's.
• Copies of the last two most recent pay-stubs - with year to date information
• Copies of the most recent bank statements for all deposit accounts
• Copy of Social Security Card
• Copy of Driver's License
• Mortgage Statement - A copy of my most recent mortgage statement for my current residence
• Insurance and Taxes - A copy of both homeowner's and windstorm coverage along with a copy of paid property taxes.

     So I printed out my pay stubs, made copies of my driver's license and SS card, and called my wife to begin working on the other things, since she's our household record keeper.  Hank said he would be working on his end, while I was working on mine.  I also downloaded an ebook called, 2 Years to a Million in Real Estate, by Matthew Martinez.  I'll keep you updated on whether this book is helpful or not.
     And that's pretty much it for the first day.  I am excited about this endeavor and will be posting blogs in the future as I continue. 

Please check out my website for my other side business/hobby. www.yrlenterprises.com and at facebook.com/yrlenterprises.