All Forum Posts by: John Winters

Hey BP ~

Long (horrible) story kept short, I co-signed/co-owned on a property YEARS ago. I signed when I was about 22 (should have known better), and it remained open on my credit for years.  After not refinancing me out (as agreed), the primary co-signer/owner then also missed consecutive payments in recent years. I had to push to sell the home over the past two-to-three years.  I did not ever pay towards the mortgage, only helped with co-sign, and received some equity share.  When I pushed for the sale, the co-owner stopped paying the mortgage completely -- for 12 months straight (basically all of '2024').  He drained some equity, and the home was sold, closing a few months ago, in January 2025.

*My own credit, work history, debt-to-income, savings, etc. otherwise, is excellent -- all strong, zero negative marks. I have since thankfully been approved for non-QM mortgages (with high deposits and rates) and hard-money. I have not used any yet.

I found a duplex that I would like to buy, as a primary residence; the FHA loan is assumable at 2-3%.

Unfortunately, the lender, of course, automatically denies me because the person for whom I co-signed did not pay the mortgage for 12 months, with the final month being December 2024.

I take my accountability for not knowing better and for not forcing a sale much earlier.

Does anyone have any ideas how I can work-around this to assume the 2-3% FHA mortgage?

I understand that it looks wild.  It's also evident the entire rest of my credit is great.  I do have bank statements that reflect the co-owner paying for it as agreed, while it was being paid.

**Any possibility of opening an entity (LLC or otherwise) that I could use to assume the mortgage & close? Again, my credit score is great, but if anyone digs into the profile, the missed payments from the co-signed property are clearly reported. Also, I realize FHA mortgages are intended for primary residences, not investments/businesses (LLCs). Although, I do believe there are some rare occasions in which an LLC could be approved for an FHA?

The situation is unfortunate.  I know this is a long shot, but I figured I'd put it out here and see if anyone has some insight and/or ideas for a work-around.  Thank you in advance for any feedback!

john

No problem; thanks again for sharing.  I appreciate it.  

Dominic Mazzarella & Obed Calixte ~

Thank you both for sharing some feedback.  I really appreciate it.  It's been a few days; please pardon my delay in responding.  

Dominic, I agree with your cautions. I'll check around with some lenders to see what they share about their comfort with the timeline - whether HELOC or not.

Obed, YES, that's right.  I definitely forgot those important details.  Thank you.  I guess I could do some work-arounds -- maybe reserve one unit in the first purchase for use as an AirBnb, and reserve my own time in it when needed - instead of claiming it as a primary.

Are either of you (or anyone) familiar with a finance product/loan that will allow me to purchase under $150,000 (w/ strong credit) and do much of my own work and live-in a portion as a primary residence?  

Thanks again to you both for your feedback.  

Greetings BP ~

I am hoping to receive some feedback on the financial feasibility of this plan and/or some tips to improve it.  Thanks in advance.

*I currently live in the Northeast (U.S.).  I plan to purchase a primary residence, multi-family home (2-5 units, 'house-hack').  It will cost less than $150,000 and will need moderate renovation work.

*Soon after, I will be moving to the South, where I will purchase a relatively moderate-priced home (less than $350,000), likely a single-family, possibly a duplex.

~ I will most likely purchase the first home (multi-family) using a bridge-DSCR loan combo or a FHA203K (3.5-20% down). I would like to do the renovation work myself and hire skilled tradespeople when needed. The rental income from the first home will pay for the mortgage/monthly costs. THEN, I plan to purchase the second home using a FHA or conventional loan (3%-5% down), for which I will likely pay the monthly cost out-of-pocket, maybe with some rental income support if it is a duplex.

My concern is, I do not want to spend my savings or weigh down my debt-to-income ratio so much so that I cannot qualify for and pay the down payment and closing for the lending on the second home.

Questions: 

- With the first home being multi-family, 75% of the rental income (or potential rental income initially) will relatively either maintain or boost my debt-to-income ratio from lenders' perspectives, right?  Again, I do not want buying the multi-family home to block me from accessing lending for the second home when I move.

- Does anyone see any flaws or can offer some improvements/considerations to the financing strategy of this plan? It has BRRRR aspects to it. (For example, IF I was able to purchase the first home (multi-family) outright, paid-in-full, then use a HELOC to pay for the down payment and closing costs for the second home, would that be a smarter approach?)

- Will lenders likely make me wait more than 1-6 months from closing on my multi-family, to approving lending for the second home? (My credit scores are solid.)

Thank you in advance for any feedback. I appreciate it.

john

@Chris Seveney @Don Konipol

Chris and Don, good morning to you both -- and thank you both for confirming it can be done.  It's really helpful to be confident that the premise/approach is possible.  

Also, I appreciate your questions for considerations, all great questions.  Honestly, I'm in contemplation of a few of them.  I'm considering two projects right now, this one and one that is much simpler to get started.  This one has more risk, but will set me up better for future projects/investments. 

Chris, thank you for 'interest-only payment' idea.  I like that as a stronger offer. Also, if you don't mind, is there a specific place in the paperwork/process that the owner would defer interest?

Don, thank you for the appraisal advice and reminder to put a value on my time and work.  My goal is, in exchange for my time and work, I have a place to live and financial means to spring into a second project.  This first one will just take longer to achieve that, is the plan.

In the end, capital for the renovation is my biggest concern right now.  Also, I may ask a 'structure guy' I know to do a walk-through with me to get some feedback on the extent of structural work.  It appears to be light work in that regard, but I would value a second opinion for that too.  

Thanks again!

Greetings BP's Community!

I don't know how "innovative" this is or isn't, but I'm still working at my first property.  I have a property in need of renovation.  The seller is agreeable to do some form of seller-financing with me, and I'm agreeing to pay $105,000 for the property and flexible agreement.  I plan to do much of the work myself.  It's currently structured as a single-family, and I'll convert it to a duplex or triplex...renting out each unit as it is ready, and likely move into one too.  That's just some context.  I'm open to input/tips regarding any of this, but here is my main question right now:  

CAN I DO THIS plan outlined below if the owner agrees, AND/OR is there a more financially-sensible approach?  

Step One: I pay seller an agreed upon down payment (or do no-money down, if agreeable).

Step Two:  Record the promissory note that details arrangement for this seller-assist sale/purchase.  Property title is transferred to me.

Step Three:  Monthly payments are agreed to be delayed for 6-8 months while I bring the property back to Life (rehab).  I rent out a unit or two as they are ready, still with plans to move into the final unit once completed.

Step Four: Once the property is restored, I take out a HELOC/equity loan to pay the seller the remaining due (likely ~$100,000).

Step Five: Property is renting, seller is paid, and rental income pays back the HELOC/equity loan + cash flow.

This seems to be a twist on BRRRR that includes seller-financing to get started and a HELOC/equity loan used to pay the seller (balloon payment) instead of a mortgage.

Am I missing anything? 

Thanks for any and all constructive feedback!

@Paul Welden

Hey Paul - thank you! I missed your reply; my apologies.  I appreciate you sharing...  That was definitely a concern, the length of time, but using 75% of the eventual income for qualification is great! 🙂

Thanks again for sharing!

john

Greetings BP,

I have been searching for my first multi-family property for nearly one year. I come across large single family residences in high-renter, multi-family areas. The renovation cost, particularly to put in the multiple units, is a bit over what I can and would like to pay out of pocket. I plan on using an FHA 203K loan and Live in one of the 3-4 units.

Has anyone here ever changed the property usage/zoning from single family to multi-family while using an FHA 203K, thus allowing a larger loan limit?  Is this possible, and if so, how would I approach it -- timing-wise?  I am considering one specific property at this point.  It likely won't last on the market long, and the owners just want to sell it; they do not want to change usage/zoning.

Any ideas/experience to make this happen?

I appreciate any feedback - thanks!

john

@Brent Kane Definitely Brent - that's great news.  I'm glad you found an experienced contractor for your team, and wish/will you the best for your project!

Greetings BP,

I appreciate any tips and/or answers that anyone can share.  Here's the scenario and questions; I'll aim to be concise.  Thank you.

* Scenario: My Wife and I plan to use an FHA in my name to buy/renovate a triplex. Once bought & working on it, we plan to put money down on land, which will then have the title put in our names. We have an opportunity to buy this land at lower-than-value cost. Once the land is in our name, we intend to use the land as collateral (equity) for a 'down-payment' for a construction-to-mortgage loan and build a home (nice, but modest single family). Once built, we pay the discounted land in full with equity loan. In the end (of this scenario) we will have an income-generating triplex and a single-family home (I have some other ideas how to generate income for our single family home.).

Does this plan, based on simple outline, have any glaring flaws in it?  Does it seem realistic, especially the financing aspect of it?  Any tips or suggested alterations to the plan?

Again, thank you for any and all constructive responses - answers, tips, suggestions.