All Forum Posts by: Joshua Hollandsworth

@Jake Stuttgen Thank you so so much!

I always thought counting rental income was pretty simple. Someone told me today that I'm actually running my numbers incorrectly.

Here's How I have honestly always believed DTI ratios are calculated while including rental income.

Joe makes $5k/month at his job.

Joe has 2 rental properties that rent for $1k each. Both properties combined cost $1k in PITI every month.

Joe's going to buy a primary that costs him $500/month with no other debt.

The bank will count $750 for each rental, which puts him at $6500/Month in income.

His debts are $1500/month. Then they run the equation.

My friend told me today that they add Net rental income on top of other income, and they don't include the mortgages on rentals against your DTI, unless there is negative cash flow. This can't be true, right?

I need to move out of my current home. Unforseen circumstances have occured. I purchased the home within the past 3 months. This is a conventional mortgage. FNMA has already bought the loan. My lender, 5/3 bank told me I am free to move out and rent the property out as long as I clear everything with the county/city. They told me because it is conventional, I do not need an occupancy waiver. Should I investigate further? I don't want to be Charged with mortgage fraud.

@Vinh Huynh

My input probably won't mean much, as I'm not a vet like a lot of you guys. I just started buying property about 2 years ago. But I'd still like to put in my 2 cents because I want to learn and receive feedback for investors on the "appreciation" side of the fence. Im going to sum things up to keep it simple! So, you purchased a $500k rental and have negative cash flow.

For the money you spent here, you could have purchased 10 cash flowing rentals in certain markets. At 3% appreciation, in 30 years you can sell out for about $950k. Right? And without capex, vacancies, etc. You lost about $100k in negative cash flow. Now back to the small portfolio of 10 properties. Let's assume 0 appreciation takes place over the course of 30 years. I could sell for $500k. Now, I cash flowed $30k a year off of these properties. That's $900k added onto the $500k, assuming I never spent any of the cash flow. Also, I know we aren't looking at CapEx, Vacancy, Etc.

We would be closer to $40k+ year in cash flow but I just took it down to $30k for a better example. $1.4M vs $850k. And I didn't count any miscellaneous expenses for you. One month vacancy per every 12 months would set you back $70k+over the course of the loan.

I don't see why people invest in negative cash flow properties, but I would love for someone to explain it to me! I'm here to learn.

@Eric C. From the outside looking in, I understand your perspective. This is my twin brother, and I would be responsible for everything financially. I appreciate your input, however, it doesn't really pertain to my question. Thanks again.

A relative of mine wants to move out, yet they don't have enough money or credit. Can I co-sign and have both of our names on the title, without me changing my primary? I would not be living here... also, would I be able to collect rent from the other unit(s) ? Or would this conflict with lending guidelines?

So I made a post recently. I bought a home, with full intentions of living there. I have moved in, and have stayed there. I have encountered many different problems, and I believe the neighboring home is a drug house. I have called the police multiple times. And I've asked for an occupancy waiver from my lender, I have a good feeling that they don't care about my comfortability and they are going to deny it. I do not feel safe here. If I were to refinance into an investment loan, would I have to make up the difference in down payment, and pay for closing costs and an appraisal? Im trying to do this legally, the right way. As of now im sticking it out, but every night there is yelling, ALL kinds of traffic, and I'm their pitbulls walk outside with no leashes, and it scares the heck out of me. Any help is appreciated. Thank you.

I just bought a house to live in. I viewed the neighborhood. I looked at crime reports. I viewed the house. I was very excited to move in. We closed about 2 weeks ago, and I haven't even made my first payment. The day of transfer, I go to my new house to start moving in. Immediately, the neighbors pit bull runs to the end of their driveway.... no leash. There are 10 people living there. They blast their music at 3 AM. 20 people loiter around the house, yelling and screaming at times. I can smell drugs when I step out of my car. There is all sorts of traffic at all hours of the night. People pulling in the driveway, coming and going in 2 minutes. I can see them doing drugs from my window.. I have called the police multiple times. I am very uncomfortable living here.. this really sucks. I have reached out to my loan officer, because I know that I have to live there for atleast a year. I'm very afraid to take it further up the ranks, because I don't want the bank to call the loan do. I'm not able to move out of the property, because of the occupancy affidavit. I don't think waiting until I've made 10 police reports, to give to the bank, is a good idea. I don't feel safe, and I don't want to take any chances. The police aren't doing anything. Eventually they will know it's me calling. I have learned my lesson... I thought I knew the area well, it looked like an awesome house, the neighbors seemed nice.. Please help me. I'm not really in a position to sell, financially. Thank you.

@Curt Smith Thank you. And I know that's usually the case. I was there getting a copy of an EM check and the branch manager started telling me about using personal loans for closing costs etc. And told me that some lenders will allow it, some won't. Thank you.

@Caleb Heimsoth Thanks I've already spoke with the bank manager, he had informed me that if I let my lender know, it's not fraud. Thanks for the help! Definitely don't want to go down that route!