All Forum Posts by: Dr. Jordan E Smith

@Jeremy England Thank you! It sounds great, I'm checking it out now. 

@David Thibodeau I am in no position to give advice so I suppose it just depends on what market you're as far as what you can get for that pre approval amount. If you can find a deal on a duplex that will let you live for a lower cost than average rent in your area after the other unit is rented out, then it may be worth it for you. Others don't want to do a deal unless it will give them monthly cash flow as well or they can live for free in the unrented unit. If you live in one of the units for one year FHA usually approves 2-4 unit properties also, sometimes with the 3.5% downpayment too, according to the research I've done.

@Jason D. I hear you! 

@Jason D. 

Cool. It seems that's how a lot of people fall into investing. We do not currently have a mortgage, so we're hoping to go into our first one with as much knowledge as possible. We will probably only do the OO loan one time.

That's awesome you got started back in 2010! I wish I had known the beauty of real estate investing back then... 

Thanks for the reply!

Hey guys! 

Thanks to all the inspiring stories on this forum and the podcast, the hubs and I are taking massive action getting our finances in order to qualify for the best possible mortgage on our first rental property. Currently getting my RE license, so I can access MLS and begin analyzing more deals.

Already found an amazing agent and speaking with several lenders to find one who will lend on our desired terms: 3.5% down owner occupied on a multi-unit (tri or quad) in my local market. We're looking to build a long-term rental property portfolio. 

My question to you experienced investors is how did you get started? I'm curious about the following specifically:

1. Did you buy a SFR or a multi-unit for your first property?

2. What type of loan did you use? What was your downpayment?

3. What was your initial cash flow after all expenses? (not including tax benefits/equity/loan pay down) 

4. Did you have any land-lording experience or did you hire management right away? (will budget for it regardless, just curious)

Most importantly, would you do anything differently, looking back on your first deal? 

Thanks so much for your responses on any of the questions! 

Dr. Jordan 

@Anthony Angotti I totally get what you're saying. I will initially intend on managing the other 1-3 units that I plan to purchase through an OO loan (while living in one obviously). However, ultimately I fully intend on paying a good property manager (and possibly micro managing a tad) the 10-12% to manage my properties as they grow. That being said, everything you mentioned is still super relevant and I agree D class is a no- go from the horror stories I've read. I'm even iffy about C but thankfully there are a whole lot of those in my current market.

I love numbers also and plan to run them and get second opinions before completing my first purchase. 

Thank you so much for the response I appreciate it! 

@Samuel Ruelke I'm very glad you asked this question as it seems we are in the exact same point of our investing career.. the exciting beginning. 

My mom is a real estate agent and I literally just called her and asked her the same question. She said the same thing everyone else seems to be saying which is yes you can qualify for a 2-4 unit with an OO loan if you live there the majority of the year. This is apparently defined as at lease 6 months and 1 day, so what you described 4/7 days would get you there. Like a few others said, they don't usually send people driving by the place to check if you're actively living there (although they legally can according to the research Ive done) but they can and might check utility bills to make sure they are in your name.

It seems like a good idea to check with the lender to make sure the utility bills are the only proof they will need and let them know that you will be there most of the time and certainly not renting out the 4th unit. 

Again, I have no experience in real estate yet! My response is only based on what my mom told me as well as other research I have done. My next move is to work on prequalifying for a loan and find a mortgage company or lender that will give me the best possible mortgage - whether that be 3.5% down or 20% I want to weigh the options when looking primarily at monthly cash flow. 

Good luck to you! 

@Lane Kawaoka That is one of the issues I was concerned about. Do you have any suggestions on how to avoid this becoming a problem? 

We are currently leaning towards purchasing duplex, triplex, or quad with an OO loan, and living there for a year. I suppose finding a mortgage lender who will consider monthly DTI rather than total would help? Considering we only pay 10% on our loans monthly it is not a large payment..

@Onica Cole I definitely agree with your mindset! Yeah the only thing I am currently researching is with our type of debt, will we be out of options for a while if we get a mortgage of about 85-100k (planning to buy a little below marker, fix up, and force some appreciation). Like you said, I'm hoping this would give us some equity down the road, but I am wanting to get the ball rolling with our real investments. 

I realize there are many lenders with different qualifications, but did you have any trouble qualifying for a second mortgage despite student loans? If the lender only considers monthly payments in the DTI, it wouldn't make much of a difference for us, but if they consider the total amounts, it would be a different story.

Thanks so much for the reply, sorry for the delayed response - I'm still getting used to this forum. 

@Will Gaston I'm actually listening to it for the first time right now. It's awesome. Thanks a bunch.