All Forum Posts by: Jake Wiley

@Porsha Thompson. Increasing your credit doesn't change your DTI, it could increase your credit score if you have a lower utilization rate on your total credit, however, a lender is going to compare your debt to your income, which won't change with an increase in your credit capacity.

You will need to ensure that your lease is state-specific residential lease agreement.  States have differing laws and how tenants and landlords are to be treated.   You don't want to have an agreement that conflicts with the law.   Ultimately the law prevails but it creates unknowns etc.   

If you google "Texas Standard Residential Lease Agreement" you will find the same form popping up on multiple sites.   

If you have access to the BP forms, then I'd compare and contrast to make sure they are virtually identical from a terms perspective.    

It wouldn't hurt to check around with an attorney or two to make sure the standard template you have is current.     You definitely don't need to pay to have one drafted, but you do want to be current.   

Piling on to Erik's post, if you are making the case that it will be a primary home type purchase, your lenders are going to want to know how that is going to work from an income perspective.   If you are considering a duplex and have a downpayment 20-25% you could consider purchasing it as an investment property while you have the w-2 job.    

As far as a waiting period, they are going to want to verify your employment.   People change jobs all the time and move too, so nothing really is needed there, other than the ability to support your income.   Likely they will call HR at the new job and verify what you told them from an income perspective.       With that said, I am sure they will want to see a couple of recent paystubs so they know they aren't calling your friend to verify your employment.     However, that can be done concurrently with being under contract if you know it's all legit, so you don't need to wait for months before making a move.  

I'd keep talking to potential lenders.   

Not sure if this is being applied for in a business or personal, or how the down payment is being shown, joint account vs. business account vs. completely separate.   

If you have the requisite down payment, a credit-worthy borrower, and a good property, you have all the ingredients, it might just be that you are not talking to the right lender yet.    

Local credit unions or community banks or a lender that portfolios the loan should be able to help.  A mortgage broker may be very limited in what they can do, being they have to meet a prescriptive underwriting process that doesn't account for anything that is not deemed a simple risk.    

For a new market to be considered.   My top two indicators are.

1) Consistent Population Growth

2) Stable below-average unemployment statistics or at least a three-year trend of declining unemployment numbers that are now below national averages.   

With this data alone, I can shortlist the markets I would consider investing in for a much deeper dive.   

I applaud your concern as it is real money to a lot of these folks.     You do have to be very careful about potentially treating applicants differently, which I think is the hurdle here.   If you do find a way to preliminarily screen, just make sure you do it universally!   The sentiment is great.

Jake

@Austin Eilers - The FHA guidelines are below.

Important FHA Guidelines for Borrowers

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.

• FICO® score at least 580 = 3.5% down payment.
• FICO® score between 500 and 579 = 10% down payment.
• MIP (Mortgage Insurance Premium ) is required.
• Debt-to-Income Ratio < 43%.
• The home must be the borrower's primary residence.
• Borrower must have steady income and proof of employment.

Your issue is that its not being bought for a primary residence and being that it is not currently a residence and would require a good bit of work its not stacked in your favor.   

With all that said - I like the idea.   I've seen Ash Patel is a big proponent of buying old churches!   

@Tan Pham - 

1) I'd join a team that teaches and coaches.    You may find that the brokerages with the high commission split don't offer as much by way of coaching and training but is more like hang your shingle here and good luck.    The logic behind the statement is that with the higher split, the broker is not incented to invest much in you.        With all that said, if you find someone you click with and they are willing to help, that's the right move.    Don't just sign up with the first office you walk into.   Once you feel comfortable on your own you can look to optimize the commissions. 

2) Based on the contractual agreement the 3% will be paid to your broker and then whatever your cut is will be paid to you.   As an alternative, you may be able to negotiate that your 3% is reduced against the purchase price, just check that is okay with your broker first.   

@Matthew Rinaldo here's my two cents.  I've had rentals in smaller towns, not quite this small, but the biggest issue I have with the lower dollar rents is that the replacement costs and service calls for things that need to be fixed don't have a similar lower cost.   Toilets, HVAC, and appliances still cost the same and can and will very quickly eat into your cash flow.   You may find that you are actually subsidizing someone's life when you have to start fixing things etc and unfortunately the market simply won't bear the increase in rents to turn the cash flow situation around.   

Sometimes you might be surprised that your lead contractor can get some of the trades done more cost-effectively.   If you have one, and they have electricians they work with, it wouldn't hurt to ask if you haven't already.      

I have my builders license so I can run any part of the project, but sometimes let my go-to guys pull in subs because they keep them busy and as a result have a great relationship and pricing strategy, vs. when I call in the trades it's a one-off project for them and they price accordingly.    

Good luck, sounds like you are making a cool little space.