All Forum Posts by: Jesse Olsen

@Christopher Phillips

@Jibran Najmi

@Brent Coombs

@Mike Palmer

@Thomas S.

While I don't love disclosing this, it may help you all understand why I went the way I did when putting a roof over my mini families head.   I have a class A misdemeanor for possession of marijuana dating back nearly 3 years ago. We were denied at the first 3-4 rentals we applied at, assumable it was because of my past record and our animals (Cat, Dog, 2 Ferrets), also we are both rather young (I just turned 22 this month).  As soon as we got an acceptance call from a local complex, we jumped on it as our time was running out to find a place.  I've since grown out of the old habit and I refuse to let something as such hold down my future possibilities of being the best me.  Our apartment is $1,330 + Pet fee+ Electricity which comes out between $1,450-$1,500.   I know I need to make a plan and act upon it, and the outcome of that is 100% dependent upon my own action and effort.  Overall I may just end up staying at this complex for 1 more year and biting the bullet paying $500 a month.  

It still seems to me, at least according to the Bigger Pockets calculator, it seems to make financial sense for me to pick up a condo using an FHA loan. Keep in mind this is my worst case option, but it is showing some return on the calculator (Better than paying rent! How could it not be?). This is assuming $75,000 purchase price, being rented out at $1,000 a month with a HOA fee of a couple hundred a month for all the utilities. I could live in the condo until I can afford either a Duplex/4plex in several years. Then refinance the condo into a conventional mortgage (Will only need 20% of it paid off to qualify for conventional then I can again use a FHA to get into a multi unit which I will be owner occupying while renting out the condo for a 8% gain on my money.

My absolute goal over the next 10 years is to begin collecting multi family properties. 

My Real Estate instructor seems to think that if I purchase a duplex with a tenant already renting one half, that I can just present their current lease to a lender and can claim 65% of the amount they pay as income to help qualify for the property.   Avg duplex is between 230K -350K.  I feel $250,000 will get me in a property near what I have in mind. 

Triplexes and Quads are priced very high in the current Utah County market.  The market is popping and at my current income I do not see this as a possibility.  However, I would absolutely love to land a 4plex if I could.  

My current lease ends in 5 months.  I have the option of renewing for 12 months at the current price, or going month to month for an additional $150 a month. 

At this point in time, I plan to invest in the most aggressive, yet conservative manner possible.  I have no kids, and have no real commitments at this point in my life.  I am willing to make big sacrifices to make it work.   As far as education, I have plowed through 2 1/2 books the past month related to Real Estate investing, and am also working my way through the general textbook provided in the course.  So far I am feeling rather comfortable with understanding what is a good deal and what is not.  My overall concerns stem from the factor of what I will actually qualify for mortgage wise.  I know without a doubt I can make the monthly payment work. 

Funny enough the only factors holding my credit down is credit age and # of inquires.  All other factors are highly scored on my report (The bank just pulled my report and walked me through it, also I use credit karma to help my understanding)  The other 4 portions are flawless 100% perfect.  Never missed a payment.  Guess time is my only friend here!

Every ones responses were much appreciated, hope to hear further input from you all. 

Howdy, Hope the detail proves to be helpful, I would appreciate all the helpful feedback I can get. 

Will be applying for my first mortgage loan in the next 5 months and want to ensure I am in the best position I can possibly put myself in. My highest hope is to land in a multi family property with a FHA loan 3.5% down, and use the renters income as a portion of the total income expected on the property, therefore allowing me to qualify for a bit higher priced property.

Bit about my situation

-Currently pay $1,450 for 2 bedroom apartment.  After electricity all 3 of us pay $500 a month. 

- Excluding the cost of rent, my total expenses are only $750 a month currently (Including Car pmt).

-Income: $2,200-3,000 depending on commission. $2,200 is base pay & guaranteed.  Been at job for 2+ years at this point and plan on staying for some time. 

-Current credit score: 650 Anticipated score in 5 months:710  (Just paid off last of my CC debt, Also my credit will no longer be a "thin file" in 5 months according to the bank)

-Total cash available for purchase of a property: $15,000-20,000

-Credit cards available to me if needed for repairs/misc: $20,000 

-Only debt to my name is a $3,900 car loan.   $140 a month. 

- Will have my Real Estate license by December.  In school now. 

My ideal outcome with multi family property.

-$1,900 Expenses/ Cost to maintain property/ Mortgage payment

-2+ bedrooms in all units.

-Rent out 1 side completely = $1,000 a month

-Side 2 will presumably have 2 rooms (Where I will be living).  I currently live with my long time girlfriend, someday to be wife, who will also be paying rent.  We will also rent out the spare room in our unit, maybe to her brother who lives with us now or a friend.  Either way expected income from this side is $1,200 if we are all paying $400 ($100 LESS! than we pay now).

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Keep in mind  my income will be right around $2,500 a month.  Minus the $750 equals $1,750 available.  If I only need to contribute $400.00 a month then yes, it is absolutely reasonable for me to get into a property where I am building equity and enjoying the benefits of being a homeowner.   Right?

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Questions

1.  Does where I'm going with this make financial sense in your mind?  I feel anything is better than dumping money down the endless rent hole.   I need to have a plan in action by December.  A cheap condo is my last resort. 

2.  I have the cash to pay off my car now. Do I pay it off thus freeing up $140 a month of cash flow, or do I keep the loan and continue building credit? 

3.  Do you have any suggestions for first time home buyers and building credit?

4. Do you have any other recommendations for a first time home buyer who is looking to build a part time- long lasting career in the Real Estate Investor world.  

5.  Any do's or do not's when speaking with a mortgage broker and applying for your first time?

Thanks for taking the time to read. 

@Alex Deacon @Nick G.

All I know is no more throwing away rent for me.  Come December when my lease is up, I need to have a plan acted upon. 

Thanks for the great detail Nick!  You also Alex.  

Just to clarify, I would putting a 20% down payment on the condo therefore using conventional financing to for the mortgage. So to answer my own question, it sounds like retrieving another loan - FHA loan to be exact, in maybe 2 years, should be no problem especially if I am renting out the condo and obtaining positive cashflow from the transaction.

I love the idea of the duplex, wish I would have acted 2 years ago.  Home prices are rather high here, Utah county is on fire with all the expansion, and the idea of "The Silicon Slopes" which is merely all the big tech companies we are attracting and the new jobs that are coming from it. 

The bottom line is, I can't seem to find a "good deal" in terms of what the BiggerPockets calculator will show ya, specifically the Cash on Cash ROI is what is not showing a worthwhile investment. I wouldn't mind picking up a somewhat distressed property and working on it in the nights while living in the nicer side of the property, but my girlfriend threw a fit at the idea of moving into a house needing lots of work - Go figure! My end goal is to get into a multi unit property, but I need a plan to fall back on which is my case would be buying a condo. It seems the cheapest duplex that is move in condition around here is running $250,000 plus.

Hi Friends,

Brand new to this.  Looking to close on my first property within the next 6 months, I have narrowed it down to either a cheap Condo or a duplex. I make about $2,800 a month, 670 credit score and have $15,000 available for investment.  Currently I pay $1,450 W/ utilities for a newer 2 bedroom apartment (NEVER AGAIN, insanely priced for what it is!!!!!!!). 

Leaning towards a condo because between me, my girlfriend, and 1 extra tenant (plan to fill the spare room) the overhead  cost to maintain the property will be nothing.   I really like the idea of this because I am an avid stock investor, Just recently (2 years ago) I've started trading the market but long story short, I want to spend a good part of my life playing with stocks and don't like the idea of a house payment stopping the funding to my stock account.  

I am wondering, if I put down 20% on a condo, can I qualify for a FHA loan using 3.5% on a duplex in a few years if I occupy the future property?

I guess my biggest question, am I doing myself any harm getting into a condo at this age? Are there any special rules that an FHA loan can only be used as a first time home buyer?

Will it bar me from qualifying for another loan in the not so distant future? I would owner occupy the duplex bought with FHA financing in a few years, heck honestly in a few years if I can qualify for a fourplex, I will be doing so.

At the age of 22, I figure any investment right now is better than nothing.  I ran the numbers through the BP Rental Calculator and am looking at around a 10% return on cash investment with the investment in a condo, this does not include using 3 people's incomes in the scenario, instead it simply is being conservative guessing $850.00 a month rent for a 2 bed 1 bath.  Seems like an honest realistic estimate on return to me.  Between me and the two other likely tenants, there will be a cash flow of $1,050 if we all pay $350 each.  Sounds like a good deal to me!   The calculations I performed included all expected expenses I could possibly think of. 

Thanks for the help, much appreciated. 

P.s My current credit score is 650 with the potential of being 720 if I payoff a credit card and allow 1 more hard inquiry to expire. 

Hi Friends,

Brand new to this. I started school at Harman Real Estate academy a month back, likely will not be going into a career as an agent, rather I am just a young 22 year old trying to start life out right by learning to invest.

Recently I met with a Mortgage professional at Mountain America Credit Union. He informed me that while I was getting close, and the prospects were looking good in maybe 8 months, I did not qualify at this time, and would not qualify at any other bank around for the 3.5% down FHA loan I am seeking. He informed me this was due to my credit age. I have excellent credit in every category except credit age, and hard inquire; both will rise with time.

My goal is to purchase a duplex in the $250,000 range in Utah county.  I've run the numbers using the Biggerpockets calc what seems like a million times, and it seems a duplex is going to be the best investment for me.  I am aware that the income expected from the second unit will help me qualify for a larger loan.

My question is - Because the mortgage professional wasn't much help because I am not quite ready, I don't quite know what to expect to be approved for when the time comes.  I have been looking at properties like mad trying to learn my area but it would help if I could understand better what to expect when it comes my turn to be approved for a loan.  Is there a calculator or something online that I can run my credit and income information through to get a better idea on what to expect?

I found on "http://www.loanlimits.org/fha/" that for a two unit the low end was $352,950 and the high end was $814,500.  These numbers sound very high to me.   Is it safe to say that I likely can qualify for a loan around $280,000 if necessary?  

The help and insight is much appreciated, this is my first post, I found this group of fine lads by reading one of Brandon's books that was recommended to me.  So far, BiggerPockets rocks!