All Forum Posts by: Jim D.

I asked my bank about this and they said that the HELOC would need to be closed and re-opened under the appropriate category if I converted the home to a rental. Different banks may have different policies, so I would just ask them.

While I think it's pretty unlikely the bank would find out, I say it's better to avoid the gray area and sleep well at night.

Here's a credit union I recently used for this:

https://www.americafirst.com/loans/home-equity-loans/investment-property-loans.cfm

FHA only requires 3.5% down. Once you get accepted somewhere, I would try hard to come up with that down payment somehow and do it. You'll come out far ahead after four years by renting out your other rooms (assuming you buy a good deal).

I would agree that $100k is probably more than you need to keep on hand. It's true that if you had worst-case repairs on all 10 houses in the same month, you would need the $100k. But being diversified in all those homes makes the odds of that very low. $25k sounds pretty reasonable to me. The bigger my portfolio has gotten, the safer I've been as the better houses help cover the cost of the problematic ones.

1. Yes 2. If you have equity in the home, have you considered just accessing that with a HELOC? It's more flexible than a cash out refi. Moving in with mom sounds like an awesome plan to give you the edge to take the next step. It takes sacrifice to get ahead.

I had this problem a few years back when starting a commission only job. A couple ways to get around it are: 1. Get your employer to switch you to a salary based pay. If you make $1,000 per sale and have been averaging 6 per month, ask for a fixed salary of $4,000 per month with a bonus of $1,000 for every sale you make over your monthly sales quota of 4. 2. Find a co-signer who trusts you and is willing to sign with you. Consider offering them some compensation if you're having trouble getting one.

Excellent reply from Chris. If all else fails, it never hurts to ask a couple other lenders to take a look and see what they think. So many people stop trying after getting one no, but especially starting on loan #5 you can get a lot of varying rules depending on the lender.

I know some will disagree with this, but I think the fastest way to learn to invest is to spend 50 hours or so reading/studying and then take what you've learned and go buy your first deal. The learning accelerates so quickly once you are in the trenches with skin in the game.

You could try working for a property manager for a way to earn a basic hourly wage and learn as you go.

My experience is that between 5-10% of gross rent is a good number. Depends heavily on the condition of the major systems. If the HVAC, roof, plumbing supply AND drain lines, and foundation are all updated and verified to be in good shape, you'll come in much closer to 5%. One thing that also affects this percentage a lot is the price of the home. An $80k home and a $400k home (assuming they are the same size) cost about the same to repair. So on the cheaper home, those repairs represent a much higher % of your gross rents.

Is your loan on your primary residence an FHA? I purchased several homes with 5% down conventional loans and moved into each one for a year when I purchased them. Never had an issue with the loan approvals. Maybe try asking another lender.