All Forum Posts by: Account Closed

UPDATE:

Over the last six days I have looked at pretty much every property in my price range. Unfortunately, most of these were also going off market before I even got a chance to offer. I was very upset when I heard that my Realtor decided not to tell me about one of her own properties because it was not in a part of town she felt comfortable with...it was a duplex for only $310k. I decided not to be bitter and just keep on looking with her. Next thing I knew, there was a condo in the next town over that fit my needs almost perfectly. Almost is good enough because after a year or so, I won't need it to fit my own needs anymore, only potential renters. So, without even getting to see inside it besides pictures from the MLS, I put in a blind offer. I have 17 days to inspect it for myself, so the blind offer seemed like the best idea with it being in a desirable location, being a 3-2, and being a relatively new construction. Tonight, my offer was accepted. Hopefully, I found my deal.

Anyway...details of the deal:

City: Santa Maria, CA

Investment Style: Owner Occupied with roommates (house hacking?) for ~1 year, then buy and hold rental

Offer: $243k, $0 down VA, $2k towards closing, $2k concessions to buyer (seller asked $239k)

House: Condo, 1180s.f., $155 HOA, 3 beds/2 baths

Also, I hope this is the right forum. I think this is a deal if I have my terminology right.

I bought a condo with no money down last year through a VA mortgage and I have enjoyed living in it. I got a roommate to help bring down costs and it ended up being cheaper for me than renting. But, about a month ago I read that it's possible to have two VA mortgages at once. I started researching like crazy and decided that I would buy a second property within the year. At first I was planning on buying a multi-family, but it looks like I am priced out of that market in my area. I got a Realtor and started looking. I spoke to a mortgage broker who told me that I would need to have my current condo under a lease by the time I got to closing.

And this is where I jumped the gun.

I posted my condo on Craigslist with a move-in date of June 1st at about $200 above what I thought was the market rate with the expectation of simply gauging interest. I thought I could only get about $100-150 cash flow, but I posted it with a rent price of $1500, $350 more than PITI+HOA. Like I said, I expected to get an email or phone call here and there with people telling me it was too expensive or trying to talk me to a lower rent. I was completely wrong. Within an hour of posting I had received 10 emails and phone calls from interested tenants. I started scheduling tours for the next day. By the next morning, I had cleaned everything and had four tours scheduled in a 4 hour block.

The first family came to tour and told me they were very interested but might want to buy a foreclosure instead. I told them that if one of the other interested families qualified and signed a lease after them that they would get the condo instead. They asked me to wait 30 minutes so that they could talk to their real estate agent about the foreclosure. 40 minutes later they called me and said they wanted to sign. I had to call off the other 3 tours.

Here's the problem: VA loans take 45 days to close and I'm 37 days away from them moving in. It looks like I'll be "homeless" for a little over a week. I don't mind thanks to the extra money that will be in my pocket, but maybe I should have planned the exact dates a little more! I just honestly had no idea that rentals were going so quickly and for so much in my area. I couldn't pass up the cashflow opportunity. Even if I can't find a deal I can just sign a month to month lease on an apartment and still come out ahead.

Now the race to find a deal and prevent my own homelessness starts. Does anyone have any advice? Anyone ever been in a similar situation? I'm planning on asking one of my friends if I can pay $250 to sleep on their couch for the time in between move out and closing. Wish me luck.

Thanks Russell Brazil and Brandon Battle I appreciate the advice. I finally got an agent to meet with me and agree to work with me after a few more phone calls today. I can't imagine why they wouldn't want another customer, a commission is a commission! Maybe even better news, though, is that one of the lenders I've been talking to agreed to go up to $350k for me which opens up a lot more properties to me. I don't think I can chase distressed properties with VA funding unfortunately. I'm not particularly worried about that as I'm focused on buy and hold for rental cash flow which I think means I don't need quite the same size margins as a flipper (though I wouldn't mind the quick equity).

I've decided to go ahead with buying a second property in my local area. There's a problem, though...there is no inventory under $300k. Every house that's "For Sale" on Zillow turns out to be already under contract when I finally get in touch with an agent. The agents also seem to be ducking me based on the properties I'm asking about. I've been pre-approved for $300k through the VA but no mortgage company I've spoken with has been willing to go higher based on my income. So... Should I hold out and wait for a deal? Should I consider a condo? Should I not buy anything because the market is too hot? Any help is appreciated!

Thanks for the advice, Mindy Jensen I've read a couple of her blog posts and I think you're right.

Also, I wasn't clear with the credit part or the investment part. I've been led to believe that hard pulls are bad for your score and not to do them unless you have to. Maybe this was overstated. Regarding buying an "investment", I'd like to buy a multi-family and live in one of the units, exactly as you suggested.

Thanks for the response, Chris M. It looks like I still have more research to do.

I have read some of the VA guidebook and I think I've found that there are some bare minimums for the underwriting requirements on a second VA loan (I might be wrong, so feel free to correct me). First, one property has to be under $144k, the other has to be over. Second, you must have 2 years of income. Third, your first home must be under a lease that covers the monthly mortgage payment. That seems to be about it as far as absolute requirements.

My question is, when it comes to the lenders' own requirements, what should I expect? Is there a minimum credit score? Do they want to see liquid assets? I've heard the funding fee tends to be higher, how much higher? How much debt is too much debt (total or monthly minimums)?  I really want to move onto a second property, preferably multi-family, but I am having trouble finding out what I need to do and I don't want to take the hit on my credit for a pre-approval and not get approved for enough to buy something in my market.

Last of all, does anyone know any good VA lenders who work with people looking to leverage their VA loans into investment properties?

Thanks in advance to anyone who answers, I appreciate the help.

Wow, this thread is great! I'm definitely going to send her a link to this conversation so that she can read what all of you are saying. You guys are awesome!