All Forum Posts by: Isiah Ferguson

Read the book Rich Dad Poor Dad. The house you live in is not an asset it is a liability. This is because it is not making you cash every month. Buy assets that will cash flow to pay for your house, cars, college education for your kids etc. Do this while you are young and you will soon not have to worry about money or if you were to lose your jobs.

Put off that dream. 

Buy a quafplex and live in one unit. Every 2 years but another and live in it. Do this a few times then buy your dream house and have it paid for from cash flow.

@Isiah Ferguson

I would refi both properties with a conservative 70% LTV thats about 180k in cash and to me its a hell of a way to gain some momentum. Based on that you can house hack yourself to a 4-plex live for free, bank all your work income while utilizing your cashflow. In a few years you should be able to quit your job if you do this right and stick with the plan.

If you can get a HELOC to pay down your CC thats even better, I wouldn't pay off anything with a low interest because you can use that money to buy more real estate

Good luck 

Well Don’t be hard on yourself you are getting a lot done at your age . You are making the right choices and asking the right questions . Financial wealth is in your future 

 Fannie Home Ready with a grant for the down payment.  Let me know if you need a referral.  We don't do them at US Commercial, but we refer them out to reliable sources.  Moderator, this is not a solicitation.

Congratulations on the baby on the way.  Exciting times!!

Stephanie

Sounds to me like you are pretty financially savvy to already have 2 rental properties paid off. If you get the promotion try and live at the same level as now (I know it will be hard with another mouth to feed) and put the rest toward that debt.

I would go conventional if possible unless you are in a huge rush. Get a LOC on one of those properties just in case but only use it for real estate or an extreme emergency. I wouldn't pull out the equity unless you have a plan for using it and you think you can get a good return with it. As with anything, don't risk it if you aren't willing to lose it. And lastly get rid of those leases like @Dennis M. said. You can take a leased car and trade it in at another dealership for a different new/used car. Do it a month before the lease is up. That's how we got my wife out of the one she had before we were married. 

You are doing great, stay the course.

I did some envelope math at @J. Martin's event a few months back in response to a similar question and determined that in theory if your net monthly rental income is ballpark ~2.5x your monthly obligations [ personal PITI where you live + minimum payments on consumer debt obligations ], and it's packaged/submitted to underwriting correctly, your DTI will work out fine. You will be able to purchase/refinance up to that point which ~2.5x is reached. Since then we've closed a few for unemployed folks with no income (other than rental income), turning envelope math theory into actual practice.

In one case it was a deceased person's tax returns that were the basis for the rental income determination. The heir hadn't done tax returns yet that included income from the inherited rental properties, so we just used the tax returns from the dearly departed's trust. 

If you want to do a rough ballpark to see if you might meet this, pull up your most recent tax returns (or 2017 before you file them), look at net taxable number at the bottom of Schedule E, add back depreciation and mortgage interest, divide by 12, and subtract your P&I payment (we removed just the interest earlier, now we're including the P&I) to arrive at ballpark monthly true net cashflow, and compare to personal monthly debt obligations.

In your case, the strategy might be to find a local lender that'll entertain this, take out as much as you can using Fannie money, and only use hard money once you're tapped out of Fannie money.