How to start out buying and holding?

Question

Hi

I have our primary residence in my name only, and we were thinking about buying a home in my husbands name only and renting it out, but I would also like to be able to start buying and holding.I am new to this strategy of buying and holding.How are some of you funding your properties if you have a mortgage in your name already? Can that be done? Are you paying cash for the properties? Thanks

Ashley Pittman · Answer

thank you so much

Ashley Pittman · Answer

ok. thank you much. so helpful.

George P. · Answer

Very good advice.  Nothing more to add

Elizabeth Colegrove · Answer

We have 5 mortgages. We are doing the same thing that you described. Buying in either one or the other name but not both. You got a heads start by starting out from day one, I didn't learn till #5.

As for debt to equity, we have learned to balance when we buy houses. We trying to buy houses as early or late in the year as possible. For example if you can buy the house in oct versus Jan. You want to buy it in Oct. because than you can use that income on your taxes the following years. You also want to shop around to brokers. Some brokers will use the lease till it shows up on taxes and other won't use the the income till it shows up on the taxes.

We have had no trouble finding a mortgage broker who would go up to 10 properties. Investments after 4 just get more expensive for most brokers at 25%. Definitely call around because we have found that every person we have used, have had different rules. Also note that personal properties are much easier to get approved than investments in our experience and what we have been told

Hattie Dizmond · Answer

@Ashley Pittman

Dawn is correct.  The 4 applies to insured mortgages.  Find a small, local portfolio lender, whether it's a bank/CU or a brokerage service.  They have much more leeway in their underwriting process, which means they can consider your rental income, regardless of the length of time you have held the property.  They can & often will also consider the strength of the deal, the amount of equity that will be in the property and the current market conditions.

My personal recommendation is, if you haven't already, get involved in one of your local REIA's.  Find out who the cash buyers & landlords are and ask them for recommendations on portfolio lenders.

Brant Richardson · Answer

With multiple loans your debt goes up, but hopefully your income goes up even more.  Banks will not count your rental income for the fist two years you are a landlord because they want you to prove that you are effective at it.

Long term or short term is up to the lender.  Most people only use hard money short term because the interest is much higher than from a bank.

Ashley Pittman · Answer

thank you guys :) I have not considered hard money or private money. But with having  4 conventional mortgages in your name, doesn't that effect your debt to income ratio and put a negative mark against you?

Also with hard money, do they only do short term loans or do it depend?  Would you need an exit strategy if you are buy and holding?

Copelon Kirklin · Answer

Have you considered hard money Ashley? Usually that's a route that's taken when traditional lenders say no.

Dawn Anastasi · Answer

There are just 2 steps to starting out buying and holding.

1. Buy a property

2. Hold it

:) Just kidding

You can actually have as many loans in your name as you can get.  The "4" that people are referencing are conventional, 30-year, Fannie/Freddie backed loans.  But once you get the 5th and above you have to start looking to alternative lenders such as local banks and credit unions.  I personally have 7 mortgages under my own name and someone on the forums recently posted about getting his 11th mortgage.