All Forum Posts by: Joshua Fulenwider

Brendon, I like your plan.  Make sure your trust your brother-in-law and have a backup plan (several potential property managers).  

As far as getting around the financing I would suggest talking to credit union or bank in Virginia and ask about a HELOC (Home Equity Line of Credit). If you have more than 15% equity in your current home you may be able to tap into it using a HELOC. That would allow you to put together more funds for your investing.

Hope this helps.  Looked like no one else was jumping up and down to give suggestions.

Shay, I hope you've found your partner/investor. If not I would encourage you to start going to your local REIA. This will be a good place for you to network with investors in your area and pitch your deals. Good luck.

I'm not sure if you got an answer elsewhere. But you should be able to find a portfolio lender that will lend on it.  The questions I would have are:

• What's the age of the mobile home?
• Is it purged to the ground? Meaning it no longer has a title and is on a permanent foundation.
• How much land?  What's your plan for it?
• Is there enough value in the land itself that a loan can be made just on the land and exclude the mobile home entirely?

Mobile homes built prior to 1976 are extremely difficult to finance.  There are some lenders that will do it but they are rare.  If it was built prior to 1976 and it has been purged can create more problems.  

Rafael, check with mortgage lenders in your area.  I foresee one potential issue with this strategy but I'll also give your a solution to it.

The issue I see is that a lot of conventional financing, if that is what you use on the rentals, requires 6-12 months of rent seasoning before they will count the rent as income.  This can throw off your personal Debt-To-Income ratio when it comes time to buy your own home as you now have to qualify with higher monthly debt payments.

The way to get around this would be to finance your rentals with a portfolio/commercial lender.  Check with them, but typically these lenders do not report their loans to the credit bureaus, thus your Debt-To-Income Ratio is preserved for when you want to buy your own home.

Hope this helps.  Let me know if I can clarify anything.

Since no one else answered you I hope I can be of some help.  The real answer is: it depends.

I, personally, have been able to secure conventional financing on properties similar to what you are describing.  However, its been a couple years and lending rules are constantly changing.  That being said, I believe most of the time that conventional loans cover 1-4 family dwellings which has historically included those with mother-in-law cottages (kind of like what you are describing).

The big thing to keep in mind is that lending rules are constantly in flux.  What is true today may not be true when you go to sell it.

The bigger issue with this type of property that I have had is insurance.  Typically this set up has required me to have a separate insurance policy for each building.  Both policies need to have your lender listed as mortgagor.  Just thought you should be aware.

Not sure about the financing part.  But if this is a short sale, ultimately it is up to the bank that currently is financing it if they will accept a $40k purchase price.  The seller is most likely just trying to get out.  They have no equity otherwise it wouldn't be a short sale.  A seller subject to a short sale is usually at the bank's mercy.  What I am trying to say is you should submit the cash offer.  The worse that can happen is that they say no.  

If you secure financing you can submit two offers so that they know you are serious.  One your cash $40k and the other your financed $85k.

Another option would be to track down the bank that is currently financing it and see if they will finance you to take over the asset.   This has the benefit to them by getting a bad loan off the books and putting a good loan back on.  However, a lot of banks once a piece of real estate has gone bad on them they won;t finance that property again.  So just be aware of that.

Hope this helps.

Best bet is to be honest with your lender when they ask you questions.  

Other than that I like when people come to me with a plan.  It's even more impressive if it is written down.  It shows me that a borrower is serious and has put thought into it.  Don't be shocked if the lender turns you down but it is okay to ask why.  If you are turned down also ask if they have a recommendation for a lender that may be interested in what you are trying to do.

Come prepared with your own questions.  This shows me that a borrower is doing their homework and may be comparison shopping my rates and terms.  However, if you are seeking conventional financing you may be limited in the rates and terms you can choose between.

@Lana McGrady there are a lot of variables that you left out of your scenario and you should weigh them all before deciding on the loan.  If you are absolutely certain that you will be out of the house prior to the rate adjustment and the rate and closing costs are less than that of a 30 year fixed than it may be a good fit for you.

My advice would be to run the numbers on various scenarios and see which one fits you best.

@Tim Freeze do you have an investor lined up already?  If so, talk to them about what they want.  They may have a way that they want to structure the deal.

Two options come to mind immediately for me. First would be to set up an LLC with the partner and in your operating address how they are to be repaid and bought out of the LLC. This would be as an equity investor.

The second option be to have the partner lend you the money and secure their interest in the property with a second mortgage.  In this scenario they would be a debt investor.  They would have less say in the property but when you go to refinance or sell in most instances they would automatically be set up to get paid off.

There are a lot of other creative ways you could probably do this, but these are the first two ideas that come to mind.

@Carrianne Mucho Thank you for clearing that up.  I did not remember that.