how does a full time student finance property?

Question

so i have always had an interest in owning property, my parents have been extremely successful with it and ever since i was about 12 years old it has been my dream, weird, i know.

anyways im now 24 years old and am a full time student.  The market where i live (phoenix area) is in a major valley, and has been for almost a year and a half now following a crazy boom.  Real estate prices have have now slowly gotten back down to "affordable" and i would love to make a purchase.  i just want to start out small and get into a middle class condo style property (100-130K) with several bedrooms so i can fill it up with roomates to help pay the mortgage

Here is my problem, i understand the things that lenders look at to "approve" a buyer for a mortgage.

income
credit
collateral
downpayment
and so on

because i am a full time student i do not make alot of money, however i have excellent credit and can come up with 10% down, but i was wondering what exactly a lender consider as "income".

i have ran the numbers and i am confident i can afford the properties in the price range i have been looking at but my tax return wont agree, because i make most of my money from other sources doing side jobs, etc.

also do they take into account student loan income?  i do not have any student loans as of right now becuase i have plenty to live off of without them but i have access to 16 g's a year just in student loan money, would they count that as income?

basically my finances are as follows

actual job with a paycheck - $10-14K/yr
sidejobs - $10-14k/yr
student grants - $4k/yr
parent aid - $3-7k/yr
and have an available $16k a year in student loan (which is interest free untill i graduate, and a great rate after that)
and i have no debt, car is paid off, etc.

is it possible for a student to purchase property on a tax income level of 14K??

if not i will just have to wait untill im out of school and make the big bucks but i sure would love to start building some equity while the market is down.  And the way i have the numbers, i will only have to pay about 80  bucks a month out of my own pocket towards teh mortgage if i keep it occupied with roomates.

feel free to be honest because like you i am here to learn and thanks for your input and help.

rynophiliac

Account Closed · Answer

Most deals that fall under the label of subject-to are done without any permission from the lender and with the full risk that the lender can object later.

The seller only controls the title. They can not sign over the note. That is owned by the lender. They can not sign over the mortgage. That is a lien they gave the lender to secure the note against the property. Only the lender could approve a transfer of the loan and that would be an assumption. Assumptions as a general rule do not work.

John Corey

Calixto Urdiales · Answer

Last time I checked you have to be approved by the original lender! Thank you for your time and have a wonderful biggerpockets day........

Ryan Standage · Answer

so i asked a question, and it has been a few days and i still havent heard back from anyone so im gonna ask i again and maybe someone knows the answer

to take over existing financing, do I, as a buyer have to be approved by either the original lender, or a lender of my own?  or can the owner just sign the mortgage and property over to me and i start making the payments?

thanks for the help

ryan

Sharif Ismail · Answer

this is really a great thread

Ryan Standage · Answer

i like the sound of that.  also, in order to take over someones mortgage and aquire the property, do i have to be approved by the original lender or can the owner of the property just sign it over to me?

if i have to be approved then im back to square one trying to raise my proveable income.

if not i could just have my parents buy the property i want and have them sign it over to me.

also, like i said earlier phoenix recently experienced a huge boom, preperties tripled in value in about a year and a half to two years, they peaked, and over the past year and a half have been slowly coming down but they arent as low as they were before the boom.  because of this crazy boom and different types of expensive "equity" loans there are foreclosures everywhere,

these are really the only distressed owners that i have come in contact with thus far.

from what i understand most people who bought during this boom have negative equity, if the properties do foreclose they will be auctioned off for far less then what they were bought for, but these dont seem like something that i could profit from because of the amount that is owed on these homes in comparison to the value of the home.  is the bank going to be the one to take the hit and loose the money on thousands of deals?

also, you talked about marketing to distressed sellers, any good ideas?

i once worked for a banker who is a good friend of mine, he owns 20 houses, and find them all by little business cards that say i buy houses that i wold pass out for him door to door when i was yournger.  Do you have any suggestions for finding these distressed sellers?

if i could find a distressed owner of a middle class three bedroom condo to take over the mortgage i would be in good shape.

thanks for all the good advice

Ryan Standage · Answer

i havent researched the lease option all that much, so i dont know alot about it,  i just see the signs on the side of the road on posterbaord saying lease to own!  and they are all over town, and i im pretty big believer in the rule

"if you have to advertise it, its not as good as its craked up to be"

for example you see on tv advertisements for people to go to massage therapy school and "get the career of their dreams"  have you ever talked to a message therapist?  i know 5 and they all paid for the schooling and not one works as a message therapist.  everytime i see one of those commercials i shake my head.

i figured if these people have to advertisig that they are willing to lease to own, its probably a better deal for them.

i could be wrong, i will have to do some research on lease options but thanks for the information, do you recommend any good books or websites about lease options?
thanks

ryan

Nick Albin · Answer

Me and 2 friends went in. I scoped around and got a deal for my first house. We live there. I have done some repairs and everything and with them living there I pay almost nothing. I work full time and goto school part time though. But you get the idea.  Living with the guys allowed me to sae up a ton of money so I could go use it to buy my first investment prop.

Account Closed · Answer

You can buy and load it up with roommates. I did that after graduating when I was working in Silicon Valley. You do need to live somewhere.

John Schaub suggests you avoid buying so you can keep your capital for investing. You can rent a better place than you can afford to buy is his point. With roommates you are somewhat removing the issues he raises.

Phoenix might be down but it might not be down enough to make it a slam dunk buy opportunity. Focus on specific deals as there will be distressed sellers.

Your money might go a lot further if you focused on short term deals. Rather than work 1.5 extra days for 6 months you could put that time into hunting down deals and using your capital for marketing plus operating costs.

If you buy smart you will fine fine. It could be that you will do a lot better if you focused less on a home and more on doing deals. Ultimately it is your call.

John Corey

Ryan Standage · Answer

well, i have to admit i have not explored my options as for "creating" equity as much as i have for "building" equity because my parents use the buy and hold strategy and are extremely successful.  They do not claim to be real estate invesors, but over the past 10 years and an accidental decision to buy some land and build their dream home later to change their minds and sell the land subdivided and making 100k in a year, their minds started spinning.  ten years later they are worth 3 mil and have properties all over arizona and they dont pay a dime into them they constantly "building" equity and all of them put cash into their pockets every month its like a game of monopoly to them he has has the hotels wins.

they told me "never sell a property unless you have to to get into a bigger, better property"

i would guess that the tax laws are similiar in the UK.

anyways...  my brother and sister have both purchased property while going to school and aquired roomates to help cover costs and it has worked out well for them.   we have to live somewhere and if we can get others to pay our mortgage for us, why not?  the market right now makes this possible.

as for the lack of money, i never said that, i said i have a lack of provable income.  i have money, for downpayment and closing cost, and i would never enter into a property without havin 6 months of mortgage money sitting in a bank account just in case i cant rent a room or the roof does go out.

i do appreciate the advice, however i see no negatives to purchasing a property i can afford, at a good time (market wise) and living for free while my roomates pay my mortgage.  I have already contacted a good friend of mine with a mortgage company (who knows my money and credti situtation), and he said all i have to do to get into a place around 130k is to make another 200 bucks a week at my "proveable" job.  i will pick up a day and a half more of work a week starting next semester, and 6-8 months from now i will be ready to buy.