All Forum Posts by: Alan Russell

If you shop around you can probably find a smaller bank that will let you refi out at about 6 months if you are showing them how much work you did in the rehab

 Just one reason....the price is to high

if its in a not so great location some one will still buy it quickly if it is priced right for that area.

I was told at Wells Fargo that they would consider 70% of the rental towards income with 25% down on the property and positive cash flow.

Love Pex....dont have an issue with freezing once or twice...possibly multiple times could be an issue - anything will break with enough stress.

Adam Anderson - I unfortunately have seen hot water plumbed to a toilet even with Red and Blue pex being installed.  LOL Plumber had his helper hooking stuff up and he plugged the toilet line into the wrong side of the manifold.

@Bradley Bogdan - Bradley not sure about your thoughts or ideas however, in my world the Tenant is always "responsible" for 100% of the rent.  I would never dream of asking the government to guarantee 3X their portion of the rent however, neither do I expect them to mandate that I have to rent to someone because they have a voucher.  Personally I would consider the voucher as income however, that would not change whether they tenant meets my guidelines.  Now personally i don't use the 3X income rather I look at a prospective tenants credit worthiness and debt to income.  What I mean by this is that I generally don't like to see a tenant that is spending more than 40% of their income for rent, but more important to me is whether they pay their bills on time, have a good rental history, and no criminal activity in their history.

 So when I am doing this math it does not compute that because the tenant will be paying 1/3 of his income they are making 3x the rent.

For example....if the rent is 600 per month and the applicant makes 900 per month then they would contribute 300 toward the rent with HUD paying the difference of 300. If you consider the 300 voucher and add that to the applicants 900 per month income then they are making 1200 per month however, 3x the rent would require them to make 1800 per month.

most of the banks that I have talked with will only do cash out refi after 6 months of property ownership....

@Heather Jones - The point of my diatribe is that I didn't think this was a good idea.  Sorry for the confusion.  I was trying to illustrate that while you might be able to build a credit rating as far as having loans were concerned you somewhat offset that by increasing your debt to income which lowers your credit score.

I have found that in most cases if you make a large enough down payment you will find someone that will make the loan you want.  Problem is "large enough" is subjective and may mean 25%, 50% or even 75% down.  

if you are showing income on your tax returns then I am guessing the banks would consider you "self employed"

Lots of self employed people get mortgages.

The trick here is this....

You deposit 30K of your own money in 1st national bank of anywhere;

You obtain a secured loan from 1st national bank of anywhere for 30K;

You deposit 30K in the 2nd natinal bank of anywhere;

Obtain secured loan from 2nd national bank of anywhere;

Etc;

Etc;

problem with this is the interest and payments you will need to make.  So if the loan term is only 6 months the bank may just let you pay everything at once in which case ....no montly payments.  Thats great however if your loan for 6 months is at say 7% then you would accrue 1050 in simple interest which would be due (along with the principal) at the end of 6 months.  Thats ok also, as long as you will be able to deliver that extra $1050 every 6 months.

Where I see potential issues with this is here;

1. All those loans are going to increase your "debt to income" ratio pretty high and could make getting a mortgage difficult.

2.  If for some reason you were unable to cover a loan when it becomes due and someone looks at these transactions closely they could possibly make a case for fraud.  (not saying they would- just that they might)

3. I am not sure what you accomplished here if you have to keep moving the money around every 6 months.  Yes your total credit line has increased however, so has your total debt which is pretty much a wash.