All Forum Posts by: James Grant

Okay, so I have done quite a bit of research and planning over the last 8 months. I already own a SFR, it was a home I previously lived in and did not sell due to the housing crash and has been a rental property for about 10 years. Sicne leaving the navy I have a ten year plan to generate enough cash flow such that I can start my own business and not have to worry about pulling money out of the business to support myself. Since becoming a memeber though I've read a lot. Here is my plan and I'll list my questions afterwards. Starting in about 9 months I will go after my second rental property. The market I am looking at is dominated by single family homes so that is what I am looking at. I plan to pick up one property a year after that so that by 2026 I could leave my current job wihtout altering my standard of living. These 10 properties would all be SFR, and the area I'm looking at has turnkey properties that are selling for around $120,000.

Questions:

1.  How do I get financed for this number of properties and maintain a debt to income ratio that will continue to solicit lender approvals for these mortgages?

2.  Many people talk about local lenders being easier to work with, has anyone used lenders that are local to them vice local to the property?  If so, how has that worked out?

3.  I understand that risk is a large part of using larger leverage for rental properties.  If I were to use the 20-25% down and leverage the rest I could purchase 2 or more properties a year, and more properties means more cash flow proably.  Are there advantages to putting more down, or is it just reducing the risk involved for that property?

4.  Debt to income ratios should be less than 36%, at least that is what I've read.  I've done some calculations about this to try and see what mine would be over the course of my ten year plan, and at points I reached into the 30-33% range.  How difficult can that make obtaining additional financing?

5.  My wife and I both work.  Is it a good idea to purchase homes seperately to avoid the 10 mortgage rule or should we focus instead on our combines income to reduce the debt to income ratio?

Okay, that is probably good for now, and much longer than I expected.  Thanks for all the help and advice.  BP has been a great resource.

James 

@Richard Channer.  I'm about as new as you, but I've done a lot of research as I get into more investment properties.  As for property searches I use Zillow and Realtor.com to find homes in the area, and then talk to my real estate agent.  Putting together a good team would be a great start since people like my agent tend to be a little more knowledgable about what is coming onto the market.  I live about 6 hours away from where my rental property is located and plann to invest in that area due to the price of single family units.

For the no money down option for home purchase I'd look at VA loans if you qualify. I've used a VA loan to purchase two homes with $0 money down. I know you can get a low money down 3.5% with the FHA loan, but I'm not sure of any other traditional finance method that can get you into a property for less than that. Like I said I'm new also so take my advice with a grain of salt since there are people on here who have been doing this a lot longer than I have.

@John Cohen I know of a few multifamily units in the market area that I am looking at, but from a leverage stand point I think I would need more capital to start with then what I have been able to put aside.  A lot of what I've researched has stated that you need 20% or greater down to secure financing for investment properties and those largeer multifamily units come with a much higher price tag.  Thoughts?

My successful rental property has been in the Southeast Georgia location.  I am looking to continue to invest in that area since I have people there I trust to assist in the management of the properties.  My questions really relate to finding a lender willing to do multiple mortgages and what I should look for in a lender besides the lowest rate.  My rental property was my own residence before I was transferred so I have yet to deal with a lender directly for a property that would not be owner occupied first.  What kind of rates can I expect as I continue to purchase properties and get into the 10 mortgage range, considering I intend to be able to put down close to 50% on each property?  I have read a lot of recommendation that finding lending locally may be easier than the larger banks, is this true?  Also, my plan has been focused on single family starter homes considering the location and the demographic target that I am looking for tenants.  What are the recommdenations for larger multifamily units and what lending challenges do those provide?  Thanks for the help.

James

I'm a recent retiree from the Navy and have one rental property that has done very well for me.  I am looking to expand my rental portfolio over the next ten years in order to generate enough cash flow to be able to start another business and be my own boss.  I've done quite a bit of research and found that this site was recommended for aspiring investors.  Specifically, looking at lender information to help leverage those properties.