Posted by Ed Garcia on April 09, 2001 at 18:35:32:
Cash reserves can very from lender to lender, and may or may not be an issue, depending on what lender you’ve chosen, and other criteria with your credit, such as income verifications etc.
One of the main factors I would like to bring to your attention where I feel most investors/borrowers have a problem is in debt service. In many cases, they don’t have enough income to cover the 25% for expenses and vacancy, and therefore the property shows a negative cash flow. The borrower fells that they are experiencing a positive cash flow, but the lender doesn’t.
Another way of saying it is, that the lender will give you credit for 75% of the income of the property to go towards income.
This is one of the main pit falls I have experienced when dealing with borrowers who own multiple properties.