Real situation, ready to invest

[Sean Kane]

Here is the beginning of our real estate adventure and we would like opinions on what to do....
We own one house free and clear worth about 40k. It has rented for 2 yrs at $550 month. We also have another house worth about 140k, we owe about 95k. My credit is stellar but unemployed, my wifes is ok 650 or so...she makes about $1200 mth.

We would like to sell the larger house and purchase either a duplex or a house for worth about 60k putting about 30k down so we only have a 30k mortgage.
We want to keep the rental if possible. Is there a way to leverage the house we own free and clear so that perhaps we could buy a better duplex or a triplex???

I am open to every thought because as I said we are brand new to investing and don't really know what to do. My question really relates I guess to creative financing to get the most loan that we can afford on her documented income alone. It's my assumption that my stellar credit can't help right now without a job...

[Jon Holdman]

Sorry, thought maybe you meant "I've quit my regular job and plan to support myself with rentals". In today's lending environment, its really tough to get a loan without having steady income.

If you're young you might consider putting less into your primary and trying to pull some cash out of the one you already own. Investment properties are going to require about 25% down to get a conventional loan. I'm 51, and my goal is to get my primary paid off so I'm not stuck with that payment indefinitely. If you're in your 20's, having a $300 house payment (w/ taxes & ins) isn't so bad.

You might try to learn about creative deals. Owner carry, subject to, lease options. Tougher to find a good deal if you need good terms, too, but with patience you can do it.

Do read in the rental property forum about the realities of rental properties. I assume you didn't pay $40K for you existing rental. That's too much for $550K in rental. OTOH, if you paid $25K or so, and its getting $550 in rent and is worth $40K, you've got a good deal.