All Forum Posts by: Alex Silang

The thing is, my current property manager is the best I've ever had and he's starting a new firm. I only have 1 triplex so I feel there's a decent chance I'll just get ignored in a big company. He said the old property management owner (original founder passed away, it was her sister) sold the company under the staff's feet.

Any thoughts?

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I make about 50k a year, and I have some savings that I want to put a tax advantaged account. It might be used for real estate, it might not. It's not an emergency fund (I already have one). It's likely going to be put in a stock market index fund for awhile.

I was reading how self-directed IRAs have high annual fees, so that's probably not the best option.

1 Vote

I have marginal income (W2 of $30k plus rental income). I have no debt. I was thinking of doing a HELOC instead of a REFI because from my understanding it should be easier. They'll look at my current debts to pass a DTI, but will I have to "qualify" for the amount I'm looking to borrow?

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Originally posted by @Stephanie P.:

@Alex Silang

As I understand it, you make $30,000 per year. That's $2500 gross per month. Max debt for $2500 per month is $1250.

Purchasing a $400,000 property may carry a debt of $300,000 (75% loan to value). Mortgage principal and interest on a $300,000 balance is $1610 assuming 5% interest; add taxes and insurance, you're looking at probably $2,200 per month payment. If you bring in $4,000 per month on that property (assuming that's market rent), you'll get credit for $3,000 per month in income, so you're ahead $800 per month.

With that, your total debt can't exceed $2050 per month. That's housing, car payments, student loans, credit cards and installment debt. I could be wrong and maybe you do qualify. Using the formula above, do you? That's what it would look like at a 50% debt ratio. You may have to cut it back to 46%, but that depends on the investor and the underwriter.

That's a lot of house to buy on 30K per year, so unless you've got a ton of cash, I'd recommend shooting lower for the first investor property.

Yes, those numbers are correct. Thanks for running the number Stephanie. I also have a first property (detailed in original post, it makes the number more favorable) and have no debt. So is that it? Meet the DTI formula and I'm in good territory, or are other things going to raise red flags (high amount of rental income, low W2)?

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Originally posted by @Stephanie P.:

Originally posted by @Alex Silang:

This is my financial situation:

30k income

Rental property (I own):

4k monthly rent
1.5k/mo PITI

Want to buy:

350k-400k property
4k monthly rent

I've used online calculators (for what they're worth) and they say I qualify. Also, another mortgage broker showed me how to calculate DTI ratio and I pass.

However, I emailed a mortgage broker recently and he said "not a sure thing". Is he just trying to cover himself, or am I at high risk of getting rejected? Is there something as I'm missing?

Here's the bad and the good.

The bad:

You don't qualify to buy that property using conventional financing. Your income and the property's income won't support the debt.

The good:

You can get a loan with a mortgage broker/lender that does no income verification loans. They are readily available.

Back to the bad:

You won't get Fannie Mae rates or terms. No income verification is a much riskier loan, so it's priced accordingly. Where a 30 year fixed for an investor property may be priced at 5.5% (I'm guessing there, but a 300K loan would cost 1703 principal and interest), you may be able to get a 30 year fixed on a 1-4 unit property at 6.99%. or $1994 principal and interest for the same amount.

...and finally, more Good:

Is it higher? Yes. Do they close? Absolutely they close and while you're not getting the lowest rate possible, you're still grossing about $1500 per month. I'd take that rather than lose the deal.

Stephanie

Thanks stephanie. Do you mind posting the formula that I'm not qualifying for?

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This is my financial situation:

30k income

Rental property (I own):

4k monthly rent
1.5k/mo PITI

Want to buy:

350k-400k property
4k monthly rent

I've used online calculators (for what they're worth) and they say I qualify. Also, another mortgage broker showed me how to calculate DTI ratio and I pass.

However, I emailed a mortgage broker recently and he said "not a sure thing". Is he just trying to cover himself, or am I at high risk of getting rejected? Is there something as I'm missing?

0 Votes

I was wondering long term, what the trend is (over say 10+ years). Rent increase at the level of inflation, while mortgage costs stay constant, your cashflow should increase right?

Any insight is appreciated.

1 Vote

This is the question facing me. If I were to refinance (at 1.0% higher rate and larger loan), I'd have enough for a 2nd identical triplex. The additional cashflow of a 2nd property would be absorbed by the increased mortgage costs of the 1st property. Additional work would be minimal since I outsource management.

Of course, principal paydown and appreciation would ideally benefit from the bigger base on two properties

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Much has been made how the past recession was "historic". During a "typical" recession (not a "great recession") how low do rates typically go?

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I read a lot on these forums about people retiring “early” with mainly real estate. What do you think of this... maybe have 80% of your assets in it?

I had two triplexes. Due to some evictions and cap ex, one of them lost 20k last year. Stock market will not cost you money out of pocket but real estate can.

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All Forum Posts by: Alex Silang

Alex Silang has started 152 posts and replied 212 times.

Post: Management company acquired by a larger competitor

Post: Best tax advantaged acccount for my situation?

Post: I have low income, would a qualify for a HELOC?

Post: Getting a mortgage with 30k W2 income

Post: Getting a mortgage with 30k W2 income

Post: Getting a mortgage with 30k W2 income

Post: Does cashflow tend to increase over time?

Post: If cashflow was the same, would prefer one or two triplexes?

Post: How low do rates go during a recession?

Post: Retiring with mainly real estate