All Forum Posts by: James McMurrey

@Nick Duckworth

Happy to connect and help provide lending perspective! Welcome to the BP forums!

Congrats on taking the plunge into real estate investing. Keep in mind your FHA loan options if you try to house hack on your next purchase!

-James
Veterans Alliance- Umortgage

NMLS 2302283

@Jonathan Snider

You are correct as far as you will get more favorable rates for primary residence oriented loans. If you don't have a general contractor type RE network, then I think your plan is solid. It is much tougher to find properties below $100k and then expect a contractor to complete $50k in renovations for an ARV type scenario. Plus, many of those investment property/renovation loans have interest rates above 8% these days. Cash flow is hard to come by.

Much easier to plan around an FHA or VA loan for primary residence, then refinance/rent after a few years in this environment.

Happy to connect and help strategize from the lender perspective!

-James
Veterans Alliance- Umortgage

NMLS 2302283

@Jay Chin

It all depends on your goals. Most house hackers go for a duplex or triplex on their 1st or 2nd purchase because the rental revenue is much higher compared to their mortgage payments. Plus, you jump start into 2 or 3 units instead of just 1 unit if your ulimate goal is a larger portfolio. However, it can be a wake up call when it comes to managing a tenant that lives next door and the risk of more maintenance is always there the larger the sq ft. 

If you go with a SFH, you will likely use your FHA or VA loan eligiblity when it could be used on a duplex or triplex. Either way is successful, just depends on what's important to you.

Happy to hop on a call and help strategize. Not questioning your friend but I'm pretty sure it's not a buyer's market anywhere, INVENTORY IS STILL LOW. Ask a realtor for market knowledge. Us loan officers are better at mortgage industry knowledge. 

-James
Veterans Alliance- Umortgage

NMLS 2302283

@Javier Melendez

Shoot me a message if you want to hop on a call.

Here's some FHA info on using a "non occupying co-borrower":
if you want to add a non-occupying co-borrower to your application, they must be considered a ‘family member’ by the FHA. Otherwise, you may have to make a larger down payment.

The FHA considers the following relations to be family members:

• Child, parent, or grandparent
• Step-parent or step-grandparent
• Foster parent or foster grandparent
• Spouse
• Domestic partner
• Adopted child
• Foster child
• Brother, step-brother
• Sister, step-sister
• Aunt or uncle
• Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law

If the non-occupying co-borrower isn't a family member, you'll have to make a larger down payment. In general, the loan-to-value (LTV) is limited to 75% if the co-borrower is not a family member or if a family member is selling the property to another family member. For borrowers in these situations, a 25% down payment is required.

Regardless of the familial status, a non-occupying co-borrower must either be a U.S. citizen or have a principal residence in the U.S. Additionally, a co-borrower must meet certain eligibility requirements such as having a qualifying credit score, DTI, and income to move forward.

-James
Veterans Alliance- Umortgage

NMLS 2302283

Gomez,

Short answer: yes, by using VA or FHA loans since it will be a primary residence

Key factors:
1) location- there are different county loan limits for FHA depending on where you're planning to buy

2) Duplexes require 1 month of cash reserves, 3-4 units require 3 months of cash reserves

3) FHA allows for up to 6% in seller concessions (this can be put towards a temp rate buydown)

Let me know if you have any other questions! Happy to help from the lender perspective. 

-James
Veterans Alliance- Umortgage
NMLS 2302283

@Luca Perinuzzi

Tips for financing a duplex or triplex house hack:

1) Use an FHA or VA loan depending on your eligibility. This minimizes the down payment necessary on a larger property purchase like a duplex or triplex (0% down VA, 3.5% down FHA). And you satifsy the primary residence occupancy requirement by living in the other unit for at least a year.

2) Use seller concessions to pay for a 21 or 321 temp rate buydown on your financing. This way you minimize monthly payments while rates are still "high." Save the extra cash and live below your means. 

3) Refinance in 3-4 years to an investment property loan. Regain your FHA elgibility. REPEAT

What's cool about FHA is that they will count the estimated rental income on the additional unit towards your debt to income DTI ratio (for qualifying & underwriting).

Shoot me a message if you'd like to hop on a call. Great job planning 12 months in advance btw!

-James

Veterans Alliance- Umortgage
Mortgage Broker

NMLS 2302283

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $60,000
Cash invested: $25,000

Got almost all my money back on cashout refinance. I think it was about $6-7k left in the house. But this has been my best cashflow property. Rent is about $950 and the mortage PITIA is sitting around $460.

How did you add value to the deal?

Remodel

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $160,000

$15,000 remodel, got 100% of my money back once I cash out refinanced

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

Property Management Company

How did you finance this deal?

Investment SFH loan; cashout refinance

How did you add value to the deal?

Updated bathrooms, floors, paint and lights

What was the outcome?

Got all my money back on the refinance

Lessons learned? Challenges?

Infinite returns because technically I got all my money back out and now it's cash flowing.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $140,000
Cash invested: $20,000

Purchase Price: $140,000
Renovations: $20,000

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

Cash flow, Buy and Hold

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

Property Management Company

How did you finance this deal?

Investment Mortgage, Cashout Refinance

How did you add value to the deal?

Renovations, paint, kitchen, bathrooms

right now it's tough to make deals work with interest rates. Happy to help review some options with you!

I've help most BP members with FHA and VA properties where they live in it for a year and then rent it out later.

Shoot me a DM if you'd like!

-James 

Mortgage Broker at Umortgage