All Forum Posts by: Justin B.

So I am in the middle of purchasing my second rental property. I am getting a loan through a local bank. My lender just asked me if the property being purchased will appraise for at least $75k. She told me, "Fannie Mae just put a guideline in place saying that an investment property must appraise for at least $75k for us to do a loan on the home."

I will have to reestablish my buying criteria if this guideline persists.

Is this a fact? How do I validate this?

Welcome @Deric A. You'll hear it a lot and if you hang around long enough, you'll find out for yourself. This community is awesome. Everyone here is so willing to just give information. Listen to the podcasts, read the forums and especially the blogs, and when you get stumped, ask your questions. Read. You'll get answers.

And if you and @Anthony Martin get together for that lunch, I wouldn't mind joining. I too love to learn and talk real estate, what I do know so far. 

Good luck!

Thanks @Joseph Zanazan ! Great answer. EXACTLY what I was looking for. 

Ah! It boils down to 'more skin in the game'. I don't know why I didn't make the correlation. Thanks @Michael Smith !!

So I'm buying my first rental property (actually closing this afternoon, :)!! ) and my lender tells me last week that the underwriter has approved the loan, however, because of the loan amount and it being an investment property, the seller can not contribute any more than 2% of the price of the house toward closing costs. Naturally I became irate since I worked the total amount of the closing cost to be paid by the seller into the contract. When I asked the lender, she said these were Fannie Mae rules, tough. The solution was to ask the seller to simply lower they price of the house by the difference but it could have turned out differently he wasn't a gentleman.  

My questions are:

1) Why is there such a rule in place? Why does the bank care where the money originates? The first thought that came to my mind was that I was being punished for being an investor.

2) Is this such a common occurrence that I will only be able to count on a 2% seller contribution for all future negotiations. 

Thanks, Justin

Yeah I guess you're right. I wouldn't want to get caught in the middle of fibbing. I have a hard enough time keeping secrets around Christmas time. :)

I've been afraid of any extra nuisance that may come up with the tenants having that information. There's nothing in particular that I was trying to avoid. 

So checks written to me personally is totally the norm? Maybe I'll take that advice and get a PO Box. It might freak my wife out that strangers know where we live. She's pretty wimpy. But then again almost everything is public info. People could find out where we lived if they really wanted to. 

So I'm pretty excited my closing date is quickly approaching for my first rental property! But I need advise. 

Like many have suggested, I plan to play the role of the property manager when interfacing with tenants. I do not want tenants thinking of me as the owner. This would be hard to pull off if they're writing checks out to me! I have thought about forming an LLC to help with the obfuscation but I don't know if that's something I should do immediately.

Would it be easiest to simply form an LLC and associate a bank account with it since that's what I plan to do in the future?

What are the ways??

Quick comment. After thinking about a purchase strategy, considering the 50% rule and thinking about the comments here, I'm a little set back. Say I buy my first property for 50k and put down 10k ( all I have) and my cash flow ends up to be $200. That's a long time of saving before I can consider my second property. I guess that's where I have to get creative.

Are there any recommendations? I would like to know the answer to this as well.

It makes total sense. Just what I was looking for. Thanks!!