All Forum Posts by: Joel A.

@John Knappmann

Thanks John!! I'm anticipating my current plan to take at least 10 years before I can finally quit the day job. Maybe sooner or later who knows. You're right though!! As long as do my due diligence it should work out. Hopefully!

Hello everyone.

First things first, ive been reading tons and tons of info from this site now for about a week and Im glad to be a part of it. Im originally from the east coast and have been living in Round Rock for the past 9 years.

My goal is to buy and hold properties, make enough cash flow to live off of eventually so I do not have to be stuck in the rat race anymore.

I work for a software company in Austin.

Real Estate background:

Bought my first house 9 years ago. Which Ive been living in since.

Bought a foreclosure in early 2009 for 80k in the area, and owner financed it for 105k literally a few weeks after closing. Did this doing a wrap around mortgage. It seems many people are scared of doing a wrap however I successfully pulled it off and have not had any problems with it for 5 years. I was only able to do this working with a real estate lawyer who actually specializes in wrap arounds. My buyer has had 1 late payment in the 5 years. I feel I got super lucky with the couple that purchased the home. Ive been making $150 cash flow on it per month since and am waiting for my buyers to eventually refi out so I can get the 20k in equity I have sitting in it. I did all this with 0$ down. Not huge cash flow but considering it only took time to set it up, no maint costs and im making money off it with equity waiting for me one day, I think it made a great first investment. Looking back, I definitely could have structured the deal to make me more money but I was young and wanted to get rid of the property asap because I didnt want to pay holding costs not even for 1 month. You live you learn i guess!

I lost touch with real estate investing since that 1 deal I did a long time ago and im ready to get back in the game.

Here are my options Im currently flirting with:

Option 1)
I recently refinanced my house at a super low rate and would like to rent it out in which I will make good cash flow. When I do rent it out, I intend on buying a new house with the intentions of making it another rental in the future or a nice duplex to live in one side. In which I will just rent out all of it once I have enough money for another down payment.

Option 2)
Stay in my current home and keep paying my awesome low mortgage payment. Use the savings to save up more money to put a 20% down payment and get an investment loan via conventional lending. Im really liking the idea of a duplex but would entertain an SFR if a great deal comes up.

I just dont know which ones of those I want to do yet. I guess mathematically speaking, it would be best to rent my current home that way that guarantees me an investment loan with a great rate and cash flow for sure. Problem with this is I feel I have to wait until my first year is up because it makes me nervous to make it a rental before I lived in the house for a year because of my new refi. My first thread I created on this site actually touches on this very subject. I want to buy something new now!! 3 to 10% down payment would be much better for me then the 20% investor loan.

Anyhow, sorry for the long post. Look forward to reading more.

Joel

The thing is, from what ive been reading, its even pointless to call the lender and tell them that you are going to rent it out, it seems the lender will always want to give you a hard time. I doubt any of them would ever say "sure go ahead". They would most likely just bring up the fact that if you do it, it could trigger the DOS. We would just go in circles and at the end of the day, its just a big fat waste of time to talk to them.

If I were to do it before the year is up, it would probably just be best to do it, then if i do get the call or nasty letter from them, explain myself at that point in time.

You do bring up a good point though with the change of address thing, the fact you got that letter at least lets me know me they are keeping thier eye on that.

Which is why im still planning on changing my address now while i still live here to a po box. That way when i do get the nasty letter, i can just tell them im still living here and that there is no problem.

If you currently have a home where you live in, it would probably be a better option for you to rent that house out, then get a new loan as a primary residence where you can take advantage of a 3% down payment from FHA.

This would only work though if you could make good cash flow from your current home. And then just make sure that the new home you move into is one you could rent in the future. From there you build.

Im not familiar with any conventional lenders that do less then 20% on investment loans.

If you cant do it now, then the best option is probably just to start saving until you are financially capable.

@Matt Devincenzo

its okay matt. i was just merely stating my opinion if i was the lender. All your points are completely valid and only make the most sense, which is why I will indeed wait at least a year before i close on another purchase. Theres just no point in risking it.

Honestly, If i was the lender and see the mortgage payments were on time every month, and considering they are making money off the payments and would most likely lose money by accelerating the loan, I would let the mortgagee keep paying the payments.

Now if there were any problems with payments, then I would think differently coming from the lenders point.

This is very true. By the time it's all said and done the year would have already passed. I do like the po box idea though. I can have that changed now that way eventually when I do rent it out it won't trigger any red flags. Only bad thing is now I have a new expense with the po box cost. Will need to look into it. Not sure how much they cost.

I have been living in my current house for 9 years, about 5 months ago, I refinanced the loan for a better interest rate. My company recently moved to a different location and I would like to rent out my current home and purchase a new home. I would be purchasing the new home as Owner occupied while leaving my current mortgage the same and with the rates so low, i want to bite on it now!!

My understanding is that I must live in the house for up to 1 year unless there are special circumstances and even then you must still notify the lender. I have done a lot of research on this and i see there are generally 2 responses for this scenario:

1) just do it, as long as the lender gets thier monthly payment and on time, they wont care.

2) dont do it as it will break the contract and the lender can call the loan due.

Obviously I dont want the loan called due but I prefer option 1.

I know there are probably a ton of you on this site who have been in a similar situation and have pulled the trigger on option 1.

Has anyone ever had any problems with the lender actually calling the note due on you? My biggest concern really is when the insurance policy changes to landlord insurance that it may cause a red flag.

Am curious to hear your thoughts on this. My lender is Wells Fargo

Thanks