All Forum Posts by: Braydin Mehnert

Hey @Austin Gawthrop, 

It sounds like you have a pretty good grasp on everything. The only way to get below that 15%-20% without living in it would be a 10% second home. However, would require a decent amount of income because you would have to qualify with your rent and the mortgage of the second home with no rental income to offset everything. Beyond that, you may if its a good deal I would just switch up my classes so I could go in 2 or 3 days a week and just do the drive and count it as my primary. 

Good luck! 

@Eric Kline While there is not a specific rule against what you are trying to accomplish an underwriter would likely not believe that you are going to live there. They would say "His wife and family area a few miles away, it is unlikely that he would live here instead of at home". That said I have been able to accomplish this with couples that need temporary space apart in their relationship. Explaining to the underwriter that there is some friction in the relationship can help explain why you would need your own home. 

Another thing to be aware of is you would not be able to count your departing primary rental income in this scenario even if your wife starts paying rent. With FHA you have to be 100 miles away to use departing primary income. Therefore your income would have to be able to support both properties.

@Sundone Boutvyseth Unfortunately, none that I know of. Any time you are not living in the property it is more risky for the lender. This risk is amplified the less money you have attached to the deal. In real terms you would walk away from an investment long before a primary residence and therefore most banks will not allow it for anything less than 10%. The only other option would be to get a coborrower to bring the down payment or get seller financing with a lower down payment. 

Hope this helps! 

@Lourdes Delmo Moore 

I just moved to Bristol, TN and I love it. Its in the same Tri Cities area mentioned above, but it has the new Casino going in so there is a lot of potential. The area is also top 10 for fastest growing markets on Realtor.com and is beautiful! 

@Kimberly Donofrio Your math looks correct here. You can look at it as the rental income increasing your income or decreasing the liability. The end result should be the same. 

While this is true, it could be understood that mortgage brokers have extra points. The way it works is we as mortgage brokers are offered a wholesale rate from the lender, and then our portion is added before the rate is shown to the client. This is the rate that can be compared with all other options on an apples to apples basis. That said, rate isn't everything and you will always want something that shows the points if any associated with that rate. 

Hey @Noah Sopher, I think you are going to be very hard pressed to find comparable as this is not likely conventionally lendable. Conventional loans do not allow for two ADUs or for the ADU to exceed the size of the single family home. Because of this it is uncommon and I would not expect that you would not be able to find comparable. I have been able to do these types of properties with some non-QM and DSCR loans, but then we are just at the mercy of the appraiser for how they chose to look at the value. Typically it is much less than say a standard triplex. From a value perspective my best guess is an appraiser would value it similar to a duplex. Assuming you can find an appraiser to take it on. Would it be possible to subdivide the lot or seller carry the property?

@Kevin Pfeil I will caveat the following with the fact that I am a mortgage broker. However, at the beginning of my career I had a similar decision to work for a local bank or become mortgage broker. There are a lot of reasons I chose the latter, but the main thing is that as a mortgage broker I was able to provide better service for my clients. Statistically MBs are able to provide better pricing because they are able to shop across multiple different banks. The same logic comes into play with the products we can offer. Because we have so many different banks we are more equipped to fit everyone's unique circumstances. A simple example would be yesterday I had an appraisal come in low. With a bank this means you have to cover the difference in purchase price and appraised value with cash or drop the loan. In our case, I switched it to a new lender, ordered a new appraisal and we are going to close on time. This person is also a good example because they originally came to me with an FHA loan and now we are working on a commercial portfolio purchase out of state. He was able to make this jump because I didn't have to pigeon hole him into a specific product or area that a bank might service and was able to give him far more options both geographically and with lending options for him to grow his portfolio. That being said, there are some things that banks do better. HELOCs and ground up construction are the two that come to mind. When these things come up to me as a broker I immediately advise my clients that a local bank may be better. In summation, I think it is advantageous to have relationships with both and to consider the MB your swiss army knife and the bank your specialized filet knife for certain projects.

@Wes Mccullar While I am in agreement with @Kevin Romines, the only caveat would be if you had a way of generating a return greater than that which you are paying off in the HELOC. For example, if you HELOC is costs you 6%, but you have a wealth manager that is returning 8%, it would be better to "stack" the cash there, then to pay off the HELOC. With the current market, that is a hard thing to achieve so I would also say pay down the HELOC as either way those funds will still be available to you.

@David Urena-Amaro 

-Private money provides similar advantages to hard money in terms of speed to close and lack of underwriting guidelines. They are also some of the best ways to get the rehab funds rolled into your loan. Private money specifically would be better than hard money as it tends to have lower interest rates and quicker closes relative to bigger "Hard Money Lenders" 

-Hedge Funds are just groups of investors in charge of delivery returns for their clients based on the money given to them by their clients. It is a buzz word in real estate right now, because they have identified Single Family Homes as an asset class that they can buy to diversify their portfolio. Because they work on volume, they do not need a large cash on cash return so a lot of "mom and pop" investors have been struggling to compete against these larger investors (Hedge Funds). 

-Buyers and sellers markets are just ways of saying who has the upper hand in the market. 2009 is the best example of a buyers market, where buyers had the upper hand and they were able to negotiate lower prices as their were fewer buyers than homes. Today it is the opposite. Their are fewer homes than buyers, and the sellers can negotiate for higher prices. 

I like these! Look forward to the next ones!