All Forum Posts by: Andrew Garcia

Hi @Adam Gonzalez, below is the Fannie Mae/Freddie Max guideline on this scenario. As you can see, for purchases, if your intention is to rent out the property, you will need to consider it an investment property.

The property can still be considered a second home if one of the following applies:

• Property is rented less than or equal to 180 days and the client resides in the home the greater of either:
  • 14 days or 10% of the days property is rented.
  • Example:
    • The client rents the home for 100 days. 10% is 10 days, which is less than 14 days. The client must occupy for at least 14 days in order to be considered a second home.
    • The client rents the home for 150 days. 10% is 15 days, which is greater than 14 days. The client must occupy for at least 15 days in order to be considered a second home.
• The home has been rented out for 14 days or less.

Purchase Only: If the client intends to rent the property, follow Investment Property guidelines.

Hope this helps! Let me know if I can be of any assistance.

Hi @Andrew Hill, (great name by the way) is there a reason that you want to wait two years rather than one? You can put 5% down every year when you change primaries.

Hi @Dong Yan, I am not going to advise on whether you should change schools since that is a personal matter.

If the only comparison is between renting out your current residence and buying a new primary and keeping your primary and buying an investment property, I would go with buying a new primary. They get better rates and it seems like you really want a low rate.

Rates are still historically low. Depending on your scenario, you are probably looking at rates in the 4s or 5s. Today, I just locked a loan at 4.375% so the rates are still very low. It all depends on your scenario though.

Hope this helps! Let me know if I can be of any assistance.

 I would not look for a local bank since this is a conventional loan. You should shop with 2-3 different mortgage brokers or lenders and see which one is best for you. I would need a bit more information to give you a quote but 7.25% is atrocious.

Hi @Hans C Hormann, first off, congratulations on having a portfolio of STRs! 

My main question is: why would you buy a primary that you are just okay living in? Why not buy one that you love?

I am guessing that it is your DTI since conventional lenders will not factor your STRs into your income.

If you have 20% down, you could go DSCR and have it not be an issue. However, I think there is a better alternative for your scenario.

Use a net-rent loan. The interest rate is going to be higher than conventional but lower than DSCR. Depending on where your credit score is, you could put as little as 10% down.

This loan essentially takes the actual income received from your properties and nets it out against the mortgage. Therefore, helping your DTI dramatically.

Hope this helps! Let me know if I can be of any assistance.

Hi @Michael Lightwood, the strategy works in every market. When choosing a market, the biggest factor is price. If you are doing it in Cleveland, OH, you will not need as much capital but there is not as much spread. If you are doing it in California, there is a lot more spread but you also need a lot more capital.

It really depends on what financial situation you are in.

@Adam Manookian I moved to the DMV for my job. It is nice here but I will always be a Charlottean at heart!

Hi @Kathy Rautmann, I would throw my name for contention as a lender that can assist you.

First off, I think your plan is savvy.

As for the HELOC, I would recommend an adjustable-rate HELOC because they have lower initial rates and you are not holding them for a long time so you will likely not see a higher rate.

Feel free to reach out with any questions.

@Levi Backman basically.

Buy

Rehab

Rent

Refinance

Repeat

That is all it is.

Hi @Levi Backman, the main difference is the rehab part of the acronym.

Traditional buy and holds need minimal work at the beginning to get them to rent-ready condition. However, BRRRRs buy properties at a deep discount due to the amount of work that they need to put into them.

You cannot finance a BRRRR with a conventional loan because conventional lenders will only lend on safe, livable properties.

There are other loan products specifically for fix-and-flip and BRRRR investors.

Hope this helps! Let me know if I can be of any assistance.