All Forum Posts by: Jon Lallande

@Dakota Harrold 

The "correct" answer would be 2 years history on your tax returns or a signed property management contract. The guideline states that you can use income if "the borrower has a reasonable likelihood of success as a landlord". So every lender will be different. I would say working for a PM company would suffice.

If you do decide to move to Oceanside, hit up me @David Pere and @Donald E Appleberry , would love to grab drinks and talk plans about real estate. 

Hi Rik,

Based off of your situation option 2 doesn't sound terrible at all considering the cash flow position.

Are you only interested in cashing out? You can do an interest rate reduction loan on an investment property as long as you previously occupied the property for 1 year. 

I would recommend finding a lender that works specifically with DSCR loans or at least is competent with them.

If you have the cash but not the income this would be the best route for you. DSCR will look at the income the asset is producing rather than your income. You won't need provide any income documentation for you or your wife.

Usually rates are a little bit higher and a lot of lenders will require more than 20% down but you might be able to find someone that can work with your situation.

Good luck! 

@Dakota Harrold

@David Pere nailed it. You can absolutely use 75% of the gross rental income to qualify. Here's what you'll need:

• Land-lord experience or a property management contract
• Needs to be a 2-4 unit (cannot use ADU or rental income from rooms)
• 6 months cash reserves (6 monthly payments PITI)

Obviously you still need to meet all of the other guidelines to qualify for the loan but you can certainly do this. 

Hey David! 

Welcome to BP. Would love to connect with more SoCal investors. 

Are you planning to keep investing in Lake Arrowhead or expand to other markets?

Hi @Riku Tajima,

As a few people already mentioned, giving up on your goal to do a house-hack in San Diego is not the answer. If your DTI is the issue there are two ways to fix this:

1. Get another full time job that pays more (preferably in the same field) 

2. Pay off debt 

If you are struggling with the debt piece, maybe try doing a "rental house hack" to save some money in the meantime. Also make sure that you are being qualified using rental income from the additional units if you are doing a multi-family house hack. This can take care of a lot of existing DTI issues.

Good luck brother! 

Yes, unfortunately this would not meet the occupancy requirements set by VA. If you had the VA entitlement they would be able to co-sign for you but not the other way around.

Thanks for the tag @Mindy Jensen

Oh boy do I have some juicy news for you. Technically per the VA guidelines if you and another veteran want to buy a property together, you can buy up to 6 units with 0 percent down.

Also, there is no max loan amount on VA loans and you will not get caught up paying Jumbo loan pricing as you would with other loan products. You could buy a $3,000,000 6 unit property (as long as it's highest and best use is residential) with 0 down if your income justified.

Of course, there are a lot of stipulations. All veterans must occupy the property in order to combine entitlement. The appraiser has to deem the properties highest and best use residential. If one veteran is funding fee exempt and the other one is not you will still have to pay half of the funding fee. You do not have to split entitlement 50/50. It can be lopsided. 

One more thing to note - as long as you have a likelihood of success as a landlord (either landlord history or a signed contract with a property manager) you can use 75 percent of the additional units rental income to count as qualifying income towards your loan.

@David Pere and I have been trying to find someone who has actually done the 6 unit house hack and have not had any success. If you end up doing it, please let us know so we can interview you! 

Hi @Hannah Noble

Not to beat a dead horse here but I agree with everyone above. A few other things to consider:

• You have to live somewhere. I think house-hacking makes more sense in high cost areas than anywhere else. By house-hacking, you can at least eliminate a good chunk of your housing expense while gaining landlord experience and paying down your principal. Whether you decide to buy a multi-family and rent out the other units or a SFH and rent out rooms, you will likely spend far less than if you rented in the same area.

• Huge tax benefits. On top of the pretty awesome tax benefits you have from owning real estate (MCC credit in OC included), if you decide to rent/Airbnb rooms, you are running a business. You will be able to write off any space that you rent out as well. I'd recommend talking to @David Pere if you want personal experience as he is doing the Airbnb house hack in SD County. 

Let me know if you have any questions! 

Hi @Christopher Aguilera,

@Zack Karp covered pretty much everything I was going to mention.

Hypothetically, if VA loans had mortgage insurance or you were to go with a conventional loan, you would not be able to avoid mortgage insurance by buying a property below market value. The bank looks at the appraised value or the purchase price - whichever is less to determine your loan to value.

If you are searching random articles on google, chances are you will come across a few blog posts that are designed to lead you into a sales funnel and might not have the most accurate information. 

I would recommend checking out @David Pere articles and joining his Facebook group. There are a lot of active duty/veterans that you will be able bounce ideas off of while you are getting into REI.

Let me know if you have any questions!