All Forum Posts by: Account Closed

Jacob,

They are foreclosures from various banks. Fannie Mae Home path has done a lot of this around here. Other banks will do it too. They'll hire contractors to fix it to move in condition and still lower the price like any other foreclosure. Then at purchase, the appraisal comes out 30-50k higher than my offer. Of course it depends on the foreclosure. Some are just too wrecked and remain that way, but those are much cheaper typically.

Just an update. Because of strong equity position on both houses, rental income is included by my main lender via leases and security deposits. Just waiting to finalize for pre-approval. Also my 401k and IRA are being used for reserves. Still has over 6 months PITI for each house and more. It also continues to grow. I am starting to save cash flow for reserves for each house myself. Maintenance, vacancy, and Cap Ex (10 years out).

I was declined by one lender who needed 2 years Schedule E. The odd thing is nobody seems to care about the heloc for down payment. Here's to hopefully squeezing in a 3rd rental so soon. If I can do it and still cash flow well and better why not?

House #1 - 71k in Equity. 2 years lived in, rented in Sept this year @ 16 month lease. 31k Heloc on it.

House #2 - 64k in Equity. Purchased and rented in Oct this year. (renting by rooms). May get a 24k Heloc on it as well without any cost.

On purchase of House#2, my lender included the rental income from House#1 and did not question the 401k loan for DP or having reserves. This is the same lender I used to purchase House #1 two years back.

All houses require little to no work. The banks fix them up to move in condition and still sell 30-50k below market.

My plan would be budget a chunk of rental income from all 3 rentals to the HELOC principal after purchase of #3. I may send personal funds to it as well and pay myself back later through the rental income.

I could also just chill for a bit, but I'm sort of tearing off a band aid and want to get to 4 house rentals with little to no money down before I stabilize.

I have a 31k HELOC @ 4.75% on a rental. No cost to me. Cash-Out-Refi is 7k closing cost for only 17k. Don't want to bother.

My plan is to use the HELOC as 20% down for a Conventional Investor Loan to acquire my 3rd rental. I would cover the 6-8k closing cost on the Investor Loan. They would factor in all rental income which was both rented recently in past two months.

My day job is 50k/year. My two rentals are cash flow positive. One at $569/month, the other $700/month. Both figures after expenses, but before budgeting for repairs/vacancies. I save it all in their respective accounts for now and don't blow them away.

Only other loan besides the two mortgages is a 28k 401k loan used for down payment on #2.

Depending what angle you want to look at it... I would not be able to afford the 3rd house with my day job @ 50k/year. With rental income from all 3, I would be able to cover 3rd house and increase my total rental income by 400-500/month.

Any road blocks I should be aware of with this approach? Any way to make it better?