All Forum Posts by: Katherine Blazer

Hi @Matt Sora

HELOCs will only require payments when the money is pulled out of the property. When you put the money back in, they do not. So if you aren't using it, it will increase your cash flow. Downfalls are normally they are not fixed terms, so if you use the money for the downpayment of another property, you will want to put the money back in before the rate adjusts. These are harder to get on investment properties.

Refinance: You are pulling equity out. You will have fixed payments unless you do an adjustable. Cash flow will be consistent every month. 

I personally like refinance, but it depends on what your goal for that money is. If you are going to private money lend or fund rehabs, then try the HELOC. If it is to put a downpayment on the next project, I would do refinances. You will just want to make sure it cashflows with each of the monthly payments you are looking at.

It is not what these loans are designed for. So they are going to lend based on the lower of the appraised value or purchase price. The FHA Appraisal also has pretty specific sections including: No damage to the foundation, roof, or exterior, Safe access to the premises, Working utilities, No exposed wiring or other electrical systems, A permanent heating system that provides sufficient heat for the home, No peeling or chipping lead-based paint, Access to clean water, No termites or other wood-destroying insects, Access to, and ventilation in, attics and crawlspace, No soil contaminants, such as from a damaged underground storage container, No safety hazards, such as stairs without handrails, Compliance with local zoning regulations.

So with Convention and FHA mortgages, you can use 75% of the projected income for the additional 1-3 units to offset the mortgage. You will still need to save up for the downpayment and closing cost, which will increase as your unit price increases. Which these options, though, you can be looking at 3-3.5% down. You just need to find a knowledge lender in your state.

Some states it is, and it is a very thin line. I agree with everyone that says you are leaving money on the table if you do not know how. Wholesaling allows you to help people move on to the next step of their lives when you do not have the funds, ability, or capacity to take on the rehab or rental at that time. You do have to make sure you are doing it correctly, though. Go to a local REIA and see what they are doing. We have specific wording in Florida, you are not marketing a property you are marketing your right to buy the property. 

@Donald Krenzien Depending on your mortgage payment which it sounds like this will work. You can use 75% of future rents on your primary to offset that debt on your DTI. So you will just need to save for your next home's downpayment and closing cost. You will need to justify why you are moving: is it a bigger home, it is closer to family or work, does it have a pool (that is popular in FL, not sure was Wisconsin).

I am a lender and an agent. When I am on the listing side of the transaction, I always speak directly to the lender that pre-approved the buyer.

When I am a lender, I do offer the buyer and the buyer's agent to call the listing agent. Over the last few months, it was common practice to present how strong a financed buyer was with the competition of so many cash offers in our market. 

I also work with many investors and DSCR loans, so calling the listing agent allows me the opportunity to explain the products. Once again, presenting why our buyer is a strong candidate. Not every agent is familiar with investor loans.

If you have tried talking to the lender about this and do not feel resolved. Maybe start a group chat/text with your agents and the lender to discuss where everything stands during the transaction. We usually start this with our clients once the pre-approval is complete. 

Check the city code. We looked a purchasing a property in Boone last year and a couple in Blowing Rock. Both towns had pretty strict short-term rental regulations. 

Quote from @Joshua Austin:Drew I’m not trying to do some fraudulent claim I know this is an investment property and will be using a conventional loan with 25%. Was asking the question using 75% of the expected rental income of the property towards DTI but not income even if I am not living there as an owner occupy property.

2nd home interest rates are in line with investment loan rates. During 2020 and 2021, there was a significant rate gate, but currently, they are very similar. 

There are 3 types. 
Primary: You need to live in it. They can be 4 doors or less, including condos and townhomes. If you have multiple units in the property, you can use 75% of the income. Lowest downpayment options

Second home: You do not need to live in. But you do need to use it for personal use. Because you are using it for personal use, you cannot use rental income to qualify. Can only be 1 unit properties, condos, or townhomes. 10% down.

Investment: Can be 4 doors or less, including condos and townhomes. 20%+ down. You can use 75% of the rental income to qualify. If you are going for an unconventional loan option, you can use 100% of the rental income. 

Hi @Tammy T Pimienta I am a lender, realtor, and investor right across the bridge in St Pete. I am happy to discuss some strategies on ways to reach your goals. 

Quote from @Joshua Austin:

Thank you for the response. That is the answer I am getting from a current lender as well and am trying to see if any lenders allow it for a secondary home.

Second homes are designed for "personal vacation homes." You will need to qualify for it without using income because it should not be rented 100% of the year. There is a specific tax guideline on this. If you can qualify for it on your DTI, these conventional loans allow you to put 10% down. They do not allow multidoor homes, so no quad, tri, or duplexes.