All Forum Posts by: Josh Young

@Jordan Budke

You need to talk to a lender and create a plan, it might be a 12 month plan that requires your wife having w-2 income on your 2023 tax return and you having the same employer, pay off any bad debt that you have (basically any debt that's not your primary residence), this will help your credit and DTI. After you file your tax returns next year you might be ready to take out a HELOC on your condo and/or buy a new primary residence to move into, if you keep your condo to rent out long term they should be able to count 75% of the rent to help you qualify for the house; and honestly it might have to be another condo before you get to the house, but talk to a lender they will help you develop your plan. I know a year sounds like a long time, but even if it's two years you will look back and be glad you made a plan, a lot of people have a dream of owning rental properties but they never make the plan.

@Kyle Keane
If you have bad credit you can buy a rental property using a DSCR loan that is asset based rather than credit based. Or you could buy a distressed property using hard money (also an asset based loan) and rehab the property, then either cash out refi or sell for a profit. Another option would be a primary residence FHA loan if your credit isn't too bad, anytime you can get a primary residence loan it's a huge advantage even if you have the extra cash it's almost always better to hold extra cash. Either way you should talk to a mortgage broker, they will be able to give more specific advice. Good luck!

@Paul Sanchez

Hard to know without more detail about the property, but looks like you won't make much after 4% vacancy, 4% maintenance & repairs, 4% CapEx, and 8% PM. The good news is that's calculating on high interest and 15 year amortization, these numbers would look really good if the loan terms were 7% interest on 30 year amortization, but expenses could be double what I've estimated if it's a class C property. Either way make sure you have extra reserves to give yourself time to pivot if needed.

@Brett Brideau

The best way to learn is by doing. If you already own a home that’s a great start. Now you could buy another primary residence putting just 5% down on a conventional loan and turn your current house into a rental.  You can use 75% of market rent on your current house to help you qualify for the next. Once you have a rental you will really start learning.  Good luck!

@Julio Gonzalez

It's important to have a plan, looks like you are on the right path. I'd recommend speaking to a lender, borrowing money is a very important step and understanding the rules for a conventional loan is important. A lender will be able to inform you about specific requirements such as DTI, W-2, tax returns, etc; these will be an important part of your plan. Good luck!

@David B.

I would talk to a mortgage broker, I have heard the seasoning requirements only apply to cash out conventional, so you can do a cash out refi with a different loan product (non conventional) just make sure there is no prepayment penalty and then immediately refinance that loan into a conventional loan, the seasoning period won’t apply to the conventional refinance because it will just be a rate and term refi, not a cash out.

@Mila F.

I would just charge them more than it’s going to cost you for the extra time. If it’s going to take you an extra month to get it rented because you miss the busy season then just charge them 2 extra months, that way you hope they stay so you will be making more rather than stressing that they are going to cost you money by staying. 

Quote from @Jacob Gray:

Quote from @Josh Young:

@Jacob Gray

I know you said you don’t plan to live in the next property, but why not? You can buy a new primary residence and put just 5% down, so you could buy it now and just rent out the rooms like you are doing in your current house. Then you will have two houses rented by the room, cash flow wise rent by the room is great, especially if you can get 4-5 bedrooms.

 Hey Josh,
That is a great idea! I got my current property on a conventional loan with 3% down. Do you know if they will allow me to purchase another primary residence home within the same state at just 5% down? 

Yes, you can buy a new primary residence every 12 months, the only stipulations when you buy a primary residence are that you intend to move into it within 60 days and that you intend to live in it for at least 12 months, although you can move before that as long as you have an explanation such as job or family, it’s about intent.  You can also use 75% of market rent of your current house to help you qualify for the next.  

@Jacob Gray

I know you said you don’t plan to live in the next property, but why not? You can buy a new primary residence and put just 5% down, so you could buy it now and just rent out the rooms like you are doing in your current house. Then you will have two houses rented by the room, cash flow wise rent by the room is great, especially if you can get 4-5 bedrooms.

Quote from @Paolo Ertreo:

I am going to file my 2022 taxes as a landlord (for the first time). I have only received a form 1098 from my mortgage company. These forms have a field for "prop tax" and "insurance paid" but they both show $0 paid in 2022 (not true as I pay my taxes and insurance altogether with the mortgages).

What documentation is needed to show that I've in fact paid property taxes and insurance (and hence can deduct them from the properties' income)?

Thanks in advance

If they were not paid by the lender through the impound account check your settlement statement, either way you will want to give the settlement statement to your CPA, they should be able to deduct a portion of your closing costs too.