All Forum Posts by: Tim Delp

I don't think it will present a problem. As one poster mentioned put your address in the website that lists sex offenders and there are probably some within reasonable distance of your own house so it will be nearly impossible to avoid this issue entirely.

Article referencing population growth:

http://www.stltoday.com/news/local/metro/st-louis-region-s-population-growth-lagging-that-of-nation/article_5d588480-a6fb-51d9-acf7-7d821cd8337b.html

I agree that if you can find deals close by that would be great even if you plan to hire a PM it is nice to be close by to check on your PM and or fire/hire new PM if things don't go as planned. At the same time if you live in an expensive area I wouldn't advocate investing in cash flowing properties in an area like that. There are definitely areas that are ideal for investing in cash flowing rentals.

Have you ever been to St Louis? Have you walked around downtown St Louis? This is just my opinion but this is an old big city that appears to be slowly dying. I was there about 6 or 7 years ago for a wedding and I couldn't find much going on and much of reason anyone would be looking to move there. I think this is important for your long term prospects for tenants as well as any appreciation.

I would much rather look for a growing city, you might give up a little on current ROI but long term a city that is losing population is not going to see rents increase and most likely will see little appreciation.

I live in jacksonville, fl and invest in florida but there are other cities across the country that might be good as well but I would do a little more due diligence. St Louis might be the right place after your additional due diligence.

I'm not thinking this changes anything from a private lending standpoint. If anything it might drive current private lenders that still have money invested in traditional assets to make more available in private lending. As the economy continues to worsen people are going to look for safer and more secure investments. Most people that do any level of private lending feel as though they can manage and evaluate the risks better than they can in traditional investments so I would think it has little to no impact.

If the economy gets better and the risk/return proposition improves in other assets that would be bad for those that seek private lenders because if I can sit back and see my stock portfolio increase over 10% every year probably more private lenders will move some of their money back there.

Not sure if you are talking about banks financing a property that has been recently acquired for a long term owner or if you are talking about a bank financing the property upfront for the flipper that is only going to own the property for 6 to 12 months?

If it is the finance to the long term owner the banks are always a little scared of the price of a property escalating that fast even when repairs can be documented and a distress sale can be documented. Banks are always concerned with inflated appraisals. A lot of this went on in the escalating market in the past where fraudulent appraisals and inflated values sold to straw buyers left the bank holding the home with less value than their note.

If it is the other it is really a matter of it is a lot of man power to do the due diligence on a deal to only have that loan on their books for 6 to 12 months. Paying underwriters, processors and such to earn interest for 6 to 12 months even if it is a nice interest rate doesn't leave a lot of profit for the bank especially for the inherit risk as not all of these deals work out and the small profit margin in the banks eyes the majority that work out can quickly erode with 1 bad deal they take back at foreclosure

FNMA guidelines appear to be 70% LTV for cash out on 3 unit. FNMA makes up the majority of lending right now. Sounds like you might be going on a goose chase for an additional 5% that probably isn't out there and if it is probably not as favorable of terms. See website below for FNMA guidelines on cash out LTV
https://www.fanniemae.com/content/eligibility_information/eligibility-matrix-100212.pdf

FNMA allows up to 10 financed properties. The limit you are referring to of 4 financed properties is a bank policy not a FNMA policy. You need to speak with other lenders, there are not many but if you continue reaching out to other lenders you should be able to find 1. It probably won't be the big lenders as they all seem to impose the limit of 4. Try to find a FNMA direct lender.

I agree with the other posts that you will most likely need to accumulate some capital of your own. If you are looking at buy and hold you will be in a much better cash flow position if you can qualify for traditional home loans with lower rates which is worth saving for. Also I think you really want to do some research on what are good markets from a cash flow in comparison to the price of homes and also take in to consideration where you might want to live one day. Not saying you have to retire to where your homes are but I certainly would consider that and wouldn't accumulate home in the midwest if I want to retire to the south. Even if you don't want to be more hands on one day it is easier to manage the property manager if you are close by.
I'd suggest putting a game plan together on where you want to buy, the price points, how much capital you need to acquire your first property and then begin to save. I agree with the comment mentioned above that if you want to own cash flowing rentals you should get the best rate you can on teh credit card debt you have, pay the minimum and accumulate cash. Get to where you can buy 1 nice cash flowing rental and let the cash flow payoff your credit card.
You will want to speak with a mortgage loan office and get pre-qualified you need to see what your credit looks like, also if you are 1099 as a trucker you will need 2 years of employment as you are considered self employed. You are probably also going to have a lot of write offs/tax deduction and that is great for lowering your taxable income but not as great when an underwriter looks at your income for qualifying to buy a home.
if you write it all off it is very hard for an underwriter to be left with any income for you to buy your rentals.
I've done loans in the past for truck drivers and it can be hard to establish a lot of taxable income. Take this in to consideration and you really will need to keep your monthly debt way down in order to maximize your purchasing power.
As you being to buy properties that are cash flowing each property should help you buy more as it should increse your income for qualifying purchases.

Callum Kerr;

Sounds like you are making progress. I'm in mortgage banking and as I understand the guidelines you need two years of history managing rentals which the evidence is typcially two years on claiming rental income on your tax returns. It appears you have passed that part of the equation. Now that you have that done each additional property you purchase or that you have a history of receiving rental income you should be able to offset any mortgage payment with a rental lease and proof of rental receipt. I would be as detailed as possible with the lease, make copies of the rent checks you receive and be able to match it up with the bank account where you deposit the rent checks.
The typical guideline is that they will allow you to count 75% of the rental income to offset the mortgage payment. I would think you can find a lender that will allow you to use that method for future purchases and any properties you do not have on the past 2 years of tax returns. This may cause you to get a little less rental income than you are actually netting but still should help overall dti.
The other thing is it is always a gray area when you start asking lenders about how this will be viewed in the future as they can only really talk about now but I would think that if you have the 1 month claimed as copies of all checks and corresponding deposits that match up with your lease and can really show detail they would allow you to count the 75% to offset some or all of the mortgage payment.

When did you start claiming rental income on the condo? It sounds as though you move out as your primary residence in 2012 so you were not claiming this as a rental property for 2011 and 2010 like they would need to see on your tax returns. Underwriting will want to see two years of tax returns in order to count that income for qualifying. They are also always more stringent when someone is turning a former primary residence in to a rental property and buying a new primary. They are not too high on doing a bunch of primary residence loans for someone that is simply trying to accumulate rentals and wants to buy them as their primary residence rather than as investment property which have a higher rate, fees and larger downpayments.

Some underwriters will be more lenient than others but at a minimum they are going to generally want to see the property claimed on your tax returns and they are only going to allow you to use what you claimed on your tax returns for income.