All Forum Posts by: Damon Aniton

Yea it is all a game. I get it. I just always get a laugh when they say cash flowing property. They give all the numbers. And they are clearly falling short of cash flowing.

Why not just throw the listing out there and let the bodies hit the floor.

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I love some of these listings out there these days. It is almost as if these sellers and realtors think people dont know how to add :)

"Excellent income producing 4 plex. All units are 20 sqft studios rented for 100/mo. Asking $1,000,000 firm. This property wont last long"

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Quote from @Dave Skow:

@Damon Aniton- thanks ...definitely get a formal pre approval in place with a lender in order to find out for sure what the maximum loan amount will be and what rental income that will be usable for your present rental and also for the 3 units you plan to rent on the new 4 plex.....also - fyi - if the present loan is a VA loan - buying another property using another VA loan might be an issue - good luck

Yea like all things VA there are "loop holes" and complicated math to it. Essentially in 2020 they did away with loan limits, on the first property. They only exist if you buy a 2nd primary residence. So essentially they will take the calculation of what you spent on home 1 and VA math it to determine how much eligibility you have left to buy a 2nd primary residence.

Easiest way to explain it is divide the purchase price by 4 and that is your eligibility number. Then find the loan limit for the county you will buy the next home. Divide that by 4. Then subtract the entitlement amount from your first purchase. And if anything is left over youtake that number and multiply by 4 and this is your max purchase amount with 0 down or PMI again. Anything above this number you pay 25% down of the difference.

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Quote from @Dave Skow:

@Damon Aniton- thanks ...good planning ...yes you are better to have the untis both being LTR ...depending on how long you have owned the rental - the lender will likely use your 2022 ( and possibly 2023 and 2021 tax returns - schd E.... to determine the rental income used for qualifying .....even if your rental income is low or even negative - hopefully your large w2 income will be ample to carry the qualification ratios

I will cash flow $1100 if I rent both units. I cleared $280 on W2 this past year. If I have my calculations correct I should be good up to $920 on a 4 unit for another VA loan. My goal is to qualify for every penny of that to use.

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Quote from @Zach Edelman:

Can always go the DSCR route and not even have to worry about DTI constraints.

I have more VA eligibility I can use. DSCR will be for once that runs out.

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Quote from @Jay Hurst:

Quote from @Damon Aniton:

Quote from @Jay Hurst:

Quote from @Damon Aniton:

Quote from @Jay Hurst:

Quote from @Damon Aniton:

Gearing up to get my 2nd property soon. Likely near the end of the year or latest early 2024. My W2 income is already rather high. The high end of 6 figures. When it comes to qualifying for the optimal loan amount on my next property. I have a duplex. Am I better off having both units fully rented as an LTR when considering DTI for the next purchase? Or will 1 LTR and 1 STR be considered equally?

When did you buy the first property?

January

The reason I ask is because IF the rental income is on the tax return you use this form to determine income: https://content.enactmi.com/do...

If, the income is NOT on the tax returns becasue you bought in Jan and you have not yet filed your 2023 taxes then a lender would use 75% of the long term leases in place. So, to answer your question if you are looking to purchase before you file your 2023 tax returns it would be better to have two long term leases. That is because you cannot use 75% of a short term rental as their is not a long term lease in place.

On the other hand, IF you wait until your taxes are filed for 2023 you would be able to use the short term income (or loss) based on the form I linked above.

For right now I am not doing anything with the 2nd unit. I only have 1 of the 2 rented LTR and was waiting for the new STR rules, next month, before I decide which direction to go. Essentially what I am really looking to do is figure out which is the better option to do with the 2nd unit in preparation for the future purchase.

Right,and that is what I was answering. From a debt to income perspective it would be to rent long term for the next purchase if you buy before the income in on your tax return so you can use the rent to qualify for the next one. if you do not need the income to qulify, then do what you think is best. I am just telling you how rental income gets calculated for the next purchase.

Got it. Thanks. I was definitely leaning just doing an LTR but was not 100% sure.

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Quote from @Jay Hurst:

Quote from @Damon Aniton:

Quote from @Jay Hurst:

Quote from @Damon Aniton:

When did you buy the first property?

January

The reason I ask is because IF the rental income is on the tax return you use this form to determine income: https://content.enactmi.com/do...

On the other hand, IF you wait until your taxes are filed for 2023 you would be able to use the short term income (or loss) based on the form I linked above.

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Quote from @Jay Hurst:

Quote from @Damon Aniton:

When did you buy the first property?

January

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Quote from @Lucien Perreault:

Quote from @Quincy Mingo:

I am looking to identify my next investment strategy to acquire another 3 or 4-unit property. I would like thoughts on what makes sense based on my situation.

Current Properties:

1.) 4-unit purchase in 2021 using my VA loan. Benefit is all used up on $550K property. Cash Flow is $1,500 Monthly. Property in McKinley Park

2.) 4-unit purchase in 2022. Using FHA. 4-unit in Bronzeville, two blocks from Hydepark area. Purchased for $740K. Cash Flow $500 monthly.

3.) 3-unit in Woodlawn. Purchased with a business partner in March 2019. Property in business partner's name. $500 monthly Cash Flow. Most likely a good amount of appreciation.

My Situation:

My location is Chicago, IL
I work 9-5 in the Tech industry
Military Veteran
Strategy is Buy and hold in up-and-coming neighborhoods.
Currently planning for a wedding occurring early in 2023, so paused on any major purchase with my cash.

My initial Idea:

Use a Navy Federal mortgage program to (0$ downpayment and no PMI benefits) purchase a Primary residence single-family home in early 2024. Rent out some of the rooms.
Purchase a 3 or 4-unit in my partners name using FHA, after the wedding in mid 2024
Any creative ideas?????

My question is, who told you all of your entitlement is used up for the VA loan? Loan limits in Illinois are 726,200 for SFR, 929,850 for a duplex, 1,123,900 for a triplex, and 1,396,800 for a quadplex. With the balance you currently have, you can go after any of those. A lender who knows the VA loan can get this all situated for you without refinancing. There are some hoops to jump through but it can be done.

Oh so my calculations were off than. I thought it was a 1 number limit. Didnt realize the number goes up based on unit count. This is very good to hear.

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Chicago, Illinois

All Forum Posts by: Damon Aniton

Damon Aniton has started 18 posts and replied 72 times.

Post: Just a good laugh

Post: Just a good laugh

Post: Future finance options

Post: Future finance options

Post: Future finance options

Post: Future finance options

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Post: Future finance options

Post: My Next Investment Strategy in Chicago, IL (Military Veteran Ideas Welcome)