All Forum Posts by: Lawrence Paul

Hello again,

Curious if anyone might have a general understanding/answer to my question(s).

Stuck here in between paying off my mortgage on my first investment property and rolling the property into a LLC for future collateral on a business loan or buying 2-3 more properties under my own personal name with umbrella insurance and once those get paid off (10 years?) then roll the said property into the LLC or just sell the three investment properties and upgrade to a larger commercial property.

My investment property is currently a residential loan and not a commercial loan. Would be able to pay this loan off in about 2-3 years, but would have no remaining capital for any other purchases.

If I place a $135,000 property that is paid off into a LLC and the LLC has been operating for 2-3 years, any guesses at what amount loan I would be able to secure for the business? Would this be the best method for potential growth of my personal 'business'?

I feel as though once I achieve the 4 property limit (not counting in the potential Fannie Mae 5-10 rule, which seems like a hassle), that I would become very stagnant and soon need to sell the investment properties and upgrade to a commercial real estate anyway.

Anyone run into this thought process or work this problem out in their heads? Am I missing something that I have not yet thought of? Advise? Thoughts?

Thanks again for any and all help!

Came across this on the Fannie Mae website:

" Treatment of the Income (or Loss)

The amount of monthly qualifying rental income (or loss) that is considered as part of the borrower's total monthly income (or loss) — and its treatment in the calculation of the borrower's total debt-to-income ratio — varies depending on whether the borrower occupies the rental property as his or her principal residence.

If the rental income relates to the borrower’s principal residence:

• The monthly qualifying rental income (as defined above) must be added to the borrower’s total monthly income. (The income is not netted against the PITIA of the property.)
• The full amount of the mortgage payment (PITIA) must be included in the borrower’s total monthly obligations when calculating the debt-to-income ratio.

If the rental income (or loss) relates to a property other than the borrower's principal residence:

• If the monthly qualifying rental income (as defined above) minus the full PITIA is positive, it must be added to the borrower’s total monthly income.
• If the monthly qualifying rental income minus PITIA is negative, the monthly net rental loss must be added to the borrower’s total monthly obligations.
• The full PITIA for the rental property is factored into the amount of the net rental income (or loss); therefore, it should not be counted as a monthly obligation.
• The full monthly payment for the borrower's principal residence (full PITIA or monthly rent) must be counted as a monthly obligation. "

Thank you.

That gives me many more options!

Hello,

Curious if there are any REI friendly banks in the Philadelphia or Montgomery County area.

Looking into a cash out refinance for 30 years and all of the banks that I have tried are not very helpful.

Have about 50% equity into my newest rental after the rehab and looking to get some cash out and look for the next deal!

Thanks for any leads/help!

Just to send out an update on my monthly numbers:

Gross Income 4720+1200(rent)=5920

1st Mortgage 637 or 578(after pmi is paid)

2nd Mortgage 351

Home insurance 40

HOA fees 520

Other (property taxes) 282

Paid off my car and now seeing a DTI of 30.91%

Is there another way to calculate potential rental income from a property because my bank only calculated in all possible expenses without calculating in any potential income?

This is what caused my issues in the first place!

Final thoughts: 

If one ever runs out of DTI ratio or leverage, would it be better to pay off the existing mortgage(s) or pay cash for another investment?

Great point.

I did not even consider DTI ratio when I started.

Might have to start looking at property that does not have a HOA.

Sorry if my first post was not as clear as I had tried to make it.

Going to look into a property that can help lower my DTI Ratio for the third property.

Rookie mistakes, I guess.

Thanks for all of the advise and help so far everyone.

I might have to try a local credit union.

There are of course taxes and insurance to add in and there is also a HOA for both properties.

My primary income generates 4200 a month and the mortgage is only 640 a month.

Feel like I am between a rock and a hard place right now.

I do not spend much outside of my 'debt' and comfortably pay off all of my bills every month.

I am currently in the Montgomery County area...about 1 1/2 hours away from Wilkes Barre.