All Forum Posts by: Andrew Garcia

@Cheryl Branche this is called subject-to. It is illegal in some jurisdictions but there are lots of people still doing it. I would check with a local real estate attorney.

 @Ashek Elahi yes. You can go into the Bigger Pockets wholesalers forum and type in your city. You should be able to connect with a lot of them there. You can also talk to other fix and flippers and BRRRRers in your market to ask who they use. You can also go into Facebook and type in "real estate wholesaling" then type in your city and state and a bunch will pop up. Then, just search the group to connect. Hope this helps!

Hi @Sarah Bella, what method are you referring to? A HELOC? Cash-out refinance? Knowing this will help me give you the best information.

 @Suresh Jersian it depends on where you are. If you are in a high cost of living area, such as San Francisco, you need to stay below the conforming loan limit of $970,800 to get the best rate without needing to put down 10%. However, if you are looking in a lower cost of living areas, you will need a jumbo loan for that property. That means that the loan will not be sold to Fannie Mae or Freddie Mac, it is sold to private investors and institutions. This means higher rates and stricter underwriting standards. You would have to put down 10% on a jumbo loan.

You can look up the county loan limits here: https://singlefamily.fanniemae...

Hi @Ale Rioja, I know I am a little late to the party but I can provide some advice here since I am a lender.

1. The boarder income cannot be used for conventional financing. Unfortunately, there is no way around this.

2. You can get a 1007 for the property you are purchasing and net out the mortgage that you are getting to help your DTI.

3. You could look into FHA as they have higher DTI limits (56.99%) but they could not include the boarder income either. The house would also need to be self-sufficient.

If you do all this and your DTI is still too high, you do have options.

1. DSCR loan - use strictly the new property to qualify. Many DSCR programs do not allow owner-occupied so please be aware of that.

2. Net Rent Full Doc - Use the boarder income for a Non-QM product. Underwriting will be stricter than DSCR but has slightly better rates.

Not all lenders have these products available to them, or even know what they are, so be aware of that. Please let me know if I can be of any assistance.

Hi @Eric Kelly, as a lender, I can say that there are two things that might cause an issue here.

1. It is a condotel so it is non-warrantable for conventional financing. There is unfortunately no way around this. You will need to use an alternative financing method.

2. It is a short-term rental. Many lenders will not lend against STRs because they are afraid of it getting shut down by the government in the future.

However, I do not want to just lay out the problems, there is a solution.

I have an investor that will lend on both of these. They would need to see 12 months of STR income from a condotel management company, AirBnB, Vrbo, a property management company, etc. The LTV would be 70% on this. You can do the math to see if it makes sense for you. If you want to leverage the equity, feel free to reach out.

Hi @Suresh Jersian, you do not need to put down $100K+ to buy a primary residence. If you are a first-time homebuyer, you can put down 3% for conventional or 3.5% for FHA. Is there a reason that you want to put so much down? Is it just to avoid PMI?

Hi @Mitch Price, as a lender, I can help you in this arena. There are a few options. It really does depend on how bad your credit is, however.

1. Conventional cash-out. Strictest underwriting guidelines but likely has the best rate.

2. Full Doc Net Rent. Less strict than conventional and slightly better rates than DSCR.

3. DSCR. Most strict underwriting but likely highest rate.

I would need more information to determine which one is right for you and if you even qualify for these. If you send me a DM, we can discuss your options in a personalized manner.

Hi @Greg Carroll, the main issue with that is that you will be getting worse pricing on the financing of the home. However, once you do make it your primary residence, you can refinance when the rates drop again with the best pricing available. Other than that, it sounds like a solid plan. Build some equity now while others pay your rent.

Hi @Christopher Murphy, first, thank you for the bio. I love when people share a little personality. I, too, am a young guy but I am on the lending side of the business. 

With that being said, I agree with you, many lenders are terrible. Since you are quitting your current W2, you should look into DSCR options for future real estate endeavors. It does have a higher interest rate but it has far fewer restrictions.

There are a few issues with rental arbitrage:

1. Many landlords do not allow it.

2. Many jurisdictions do not allow it.

3. Your landlord or jurisdiction may allow it now but may change their mind at any point.

4. Lack of equity growth.

5. Uncertainty. You might not make enough to cover rent for one month and need to come out of pocket or an STR tenant might cause damage to the property that causes you lots of money.

As long as you plan for these and are prepared for the risks, you should be fine with this strategy.

Seller financing is a better long-term play since you get equity growth, stronger certainty when it comes to legislation, no uncertainty with landlords, etc. 

You seem like you are well on your way to a real estate empire. Would love to connect!