All Forum Posts by: Greg Ruff

Great question Luke, 

As a lender we use your personal income and the income from your properties to qualify you for the mortgage. Before you quit your W2, you'll want to make sure your rentals are making enough on paper to replace that other income.

Once you quit your W2 job, you'll officially be considered self employed by lenders and the important thing to keep in mind is that we can only count your NET income.

My advice is chat with a CPA who can help you structure your income properly and try and do it 2 years prior to quitting your W2 job. Also chat with a commercial lender as most investors eventually outgrow conventional financing at some point. 

Congrats on the first deal and keep up the good work!

Congrats Glen, 

I would say that getting in a group like Dan's for local investors is a great place to start. You can learn a lot from bigger pockets, but having people in the same area with similar goals is super valuable. Dan is definitely an expert in investing and will be a great resource for you. Good luck with the journey and reach out for any lending questions you have. 

 Always good to work in dollar amounts, since dollar values weren't included in the original post I don't have any dollar values to work with here. 

Great question Danny and in this situation, I think you can have your cake and eat it too. 

Refinance the mortgage down to the 75% LTV which will save you 1% on the rate but deplete some of your cash, then use a HELOC to recoup the 5% + gain an additional 5% if you find a bank, (Bangor Savings) that is able to lend up to 85% LTV on primary residence HELOC's. We have a program that will allow you to do both the mortgage refinance and HELOC closing at the same time so you don't risk losing precious buying time in this market. If you haven't guessed by now, I'm a lender with Bangor Savings, message me if you want to chat more about it!

Thank you Dan!

 Hi Dennis, this is a super common problem in the lending world. Rather than purchasing, this is going to be considered a refinance since your wife is already on the deed of the property. You and your wife will apply for a cash out refinance loan to pay off the remaining balance on the current mortgage & the balance due to the ex. 

If you do want to put the house in an LLC, make sure to address that upfront with your lender as not all residential lenders can close in an LLC. If the answer from your lender is yes, then at closing there will be a deed change that will remove the ex-husband's name as well as your wife's and adds the LLC as the sole owner of the property.

Hope this helps, let me know if you have any follow up questions!

Hi Sarah, I haven't had experience with this myself, but I do work with an investor that's actually focusing on those types of investments right now considering them to be more stable because of the guaranteed rent deposited through section 8 housing. There's typically less turnover with tenants, and it's easy to fill when they do turnover. I would definitely start by checking what % of units are receiving some sort of housing stipend or what programs may be available to them. The downside to this approach being less upside potential on raising rents over time if rents continue to climb. Hope this helps! 

Welcome Mike! You've come to the right place. Make sure to check out the New Hampshire housing program offering $10,000 in downpayment assistance, can even be used for repeat buyers depending on location. I'm a local lender in Manchester so let me know if you have any questions on that or investing in general!

Investment Info:

Single-family residence other investment.

Purchase price: $350,000
Cash invested: $10,000
Sale price: $450,000

Bought this single family residence in 2021as my primary residence using a 0% down loan to get in. I lived there for 1 year then moved out and started renting the house on Air BNB in the Summer and mid term rentals in the winter. I found that Air BNB and Booking.com were the best platforms for finding and managing guests for short term stays and that furnished finder worked well for mid term rentals.

What made you interested in investing in this type of deal?

I initially intended to continue living in the property but due to some life changes had to move out. Rather than selling the house just 1 year after purchasing and not making a major gain, I decided to rent it. Rather than lock in a year lease I tried my hand at short term rentals considering the house was located near the beach in a tourist town, it just made sense.

How did you find this deal and how did you negotiate it?

This property was actually one I was renting and was able to purchase off market from my landlord. We did not use a realtor in this case and had a title company act as the intermediary. We ended up saving more than our fair share considering this was in 2021 and sellers were getting 20 offers all above asking, we were able to buy below market value.

How did you finance this deal?

I bought the home as my primary residence, so I used a 0% down conventional loan to finance the purchase.

How did you add value to the deal?

The house was a recent flip, so it was entirely updated and there wasn't a lot of room to add value in that sense. However, I added value in other ways by managing the rental myself, from listing on sites, managing tenants, mowing the lawn, and cleaning the house in between guests. Teh amount of money saved by doing these activities myself was huge in ensuring the success of the business.

What was the outcome?

I was able to rent and manage the house for 2 summers before selling in order to move to NH for work. I would have kept the house, but the timing in the market was right and I would have been unable to continue managing the property myself so I made the decision to sell and hold on to the cash that was made from the deal for my next investment.

Lessons learned? Challenges?

Learned how to fix a sink and change a toilet!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Buying this house is part of the reason I became a loan officer and would be happy to help others do the same.