All Forum Posts by: Andrew Goodwin

@Andrew Bissada I don't feel like I answered your question well enough... let me try again.

I own property A, but then purchase and move into property B. I can now rent our property A, and later, when I'm looking to purchase property C, the rent from property A gets taken into account for the purchase of property C.

A lender would not speculate on the amount of rent that you could hypothetically get from your current residence. So if you were in A and purchasing B, you would not be able to use the "potential" rent from A to finance B.

I hope this was as clear as mud... I'd reach out to a lender and see what options are available to you.

@Andrew Bissada I'm no lender, but I'm almost positive that once you have a lease in place, they can count the income. Every loan we do one of the first things they ask for verification is the leases. I've even had a lender reject (not count) a lease because it expired in two months. They also ask for security deposits, and want you to have reserves for each rental (in my experience). I've also gone the route of conventional loans for my mortgages so far, which is generally easier to finance than FHA.

So if you owned a home, they wouldn't be able to speculate what rent you'll get for it and count it towards your income. You need proof of the income that you'll be getting from it.

@Tarvis Carson What would the ARV be on the duplex? How much in rent could you get if the properties were updated?

Also, because you're planning to finance with a VA loan, you will be required to occupy one of the units for a year.

@Wayne Brooks I purchased a 3 unit building in January with a conventional loan...

@Kirk R. A 2-4 unit property can be financed the same as a SFH as long as you live in one of the units. At closing you will sign a document stating that you will occupy the property within 60 days and live in it for 1 year. If you were to violate that clause the lender can technically call the note due.

@Drew Simpson That property you're looking at is in a country club that requires a $50,000 membership (would a country club community like this even allow rentals? Idk, that's why I'm asking) plus annual dues with an additional monthly assessment of $160/month. Taxes are about $14k/year, no idea what the insurance would be, not familiar with the area.

If your comps are right, this may be flippable, but this seems to be fraud with land mines...

Good luck!

@Shiva Sharma If you're buying an investment property many lenders will require a 25% down payment (reducing their risk). If it's occupied they will usually use a percentage of that rent to add to your income thus making it easier to purchase that property.

As far as the home you are purchasing, you would be able to use the rent from the additional bedrooms, but only if they were added on your tax returns and you had signed leases with the tenants.

Good luck!

@Andrew Bissada Currently have 3 mortgages. Basically, once you have a second property, you're able to use the "net profit" from that property as additional income, which lenders use based off of your tax returns.

Larger down payments will reduce your debt to income ratio, but as you stated, it will cause you to grow more slowly. That's the strategy that my wife and I are using and feel comfortable with. We have done conventional loans in order to avoid PMI and have a better dti ratio, but by no means is that your only option. Many people will tell you that putting down as little as possible upfront is a much smarter way to go. There are pros and cons either way, so it's really up to you!

@Aaron Fletcher You make your money on the purchase price. It sounds like you found a person who would be willing to let it go for a reasonable price (they might even be open to financing it?). They have no active interest in the home and have to pay out of pocket for the taxes, etc. You're providing them a solution.

I would definitely recommend running a search on the property to make sure that the utilities and property taxes are current, and that no liens exist on the property. Also, whose name is the property under? Does the son that you spoke to have any business discussing selling the property to you?

As far as rehab costs, if you do no plan on doing it yourself, I would recommend getting estimates from contractors so that you can have an idea of how much money will be required.

@Stephen Tanquary I don't time the market when I make a purchase. I don't have a crystal ball, I analyze the deal as is. If you're renting now, as long as the mortgage payment is less than you're paying in rent, it's a good personal decision.

Having seconds thoughts is natural. Having concerns is natural. You went under contract for a reason.

I purchased a live in flip last month. Of course I'm concerned about the market, but I know the decision I made was and is a good decision.