Multi-Family in Nashua vs. vacation rental in Joshua Tree

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Multi-Family in Nashua vs. vacation rental in Joshua Tree

Account Closed
Rental Property Investor · Boston, MA · Member since 2017 · 9 posts · 9 votes

Hey everyone! I'm new around here :)

My wife and I are getting ready to make our first purchase but we're torn between our two ideas... but also wondering if it's possible to do both in the same year.

We're moving up to New England from NYC this summer and have been weighing our town/city options. We love the metro-west area but it's pretty unaffordable for us right now, so we think we have landed on Nashua, NH. It seems like the rental market is strong there and there's a decent amount going on. Originally we were just going to buy a single-family for ourselves, but when we saw the options for multi-families in Nashua we realized that that's definitely an option.

On the other hand... we're both in love with Joshua Tree. We've spent a lot of time out there (and lived in LA for a year) and I think the market for vacation rentals there is really strong. Our plan there would be to buy some land and buy a modular/prefab home.

So our big question here is which do we start with and is it possible to do both in the same year (ie. would a lender for the second property be turned off by the first purchase this year)?

Thank you all!

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  • John Lee
    Santa Ana, CA · Member since 2016 · 39 posts · 54 votes
    9y

    @Account Closed, just speaking from my experience -- just keep an eye on your debt-to-income (DTI) ratio. Lenders can vary, but most will take somewhere between the low 40's for strict lenders, to low 50's for other lenders (back-end DTI or total debt including new mortgage).

    We actually bought a vacation home (2nd home) in Joshua Tree last year in October. Financed with 20% down -- we were currently living in a lower-end condo. We sold our condo soon after and bought a SFH in a better neighborhood and closed in January. We pretty much maxed-out our DTI ratio for the two purchases, but we had calculated it ahead of time and knew we could do both.

    This may not apply to you as if you buy land, you might buy cash. Although, we have been looking and the value of build-able lots has gone up astronomically in JT. We've seen lots of land that were selling for 20-30k a year ago sell for 50k last summer, and even 100k+ this year.

    I would recommend that you start looking for your primary home in Nashua (whether single or multi) and find out what you expect the price range to be. Then shop for lenders and get pre-approved (not just pre-qual) for a loan in the high-end of your price range. Ask the lender what DTI they will accept, and then just do the math and figure out what you can look for in a vacation rental (if cash, no real issues, but if you finance, you figure that into the DTI ratio).

    If you have all of that in order and don't take on any new debt, it doesn't matter which one you buy first.

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  • Account Closed
    OP
    Rental Property Investor · Boston, MA · Member since 2017 · 9 posts · 9 votes
    9y

    @John Lee Wow thank you so much for the reply! This was all super helpful. :)

    That's really crazy about JT - we've been going there for a few years but never seriously thought about buying a place there until recently!

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