All Forum Posts by: Sasha Mohammed

If you're lucky enough to get a free and clear property where the seller is willing to finance, this reduces much of the risk associated with seller-finance.

I would make sure the title is then moved over to your name, especially since there is not a risk of a due-on-sale clause being triggered. The seller may not want to do this, as many of these guys are benefiting from the tax deferral which comes with NOT moving title over. But you should be aware - you own nothing if your name is not on the title. This also begins YOUR title seasoning, so that when you're ready to take out a traditional mortgage, you can refinance and pay off the seller without a title seasoning issue. you can buy title insurance from the title company at closing. this is a good idea. 

Seller should record their lien against the property, you both should have an attorney review to make sure all interests are property documented and protected, and i think everyone is in a good place. 

as far as evicting tenants... this is up to what you and the seller can negotiate. i would still be putting on the same contingencies - appraisal, inspection... know what you're buying. don't get blinded by the seller-finance piece. 

I think in the private money space especially, @Jay Hinrichs approach is super important. Private money by definition is a private individual - they set their own rules for engagement and appetite. That said, I have a good friend of mine who is very well seasoned in this space, whom i have immense respect for, once told me he won't work with anyone who he hasn't known for at least 5 years. Interesting perspective, but with how much abuse there is these days, I now understand why it's a good benchmark. 

The only tidbit I feel important to put in here, unless you personally know your PM lender: if it seems too good to be true, it probably is. 

There is no one-size-fits-all answer here. i have clients call me asking to lock in the maximum buy-down we can possibly allow; and others who think its a terrible idea. 

as other's have mentioned, i would first look at your recoupment period. (cost of buy-down in dollars / monthly savings vs the free loan = # of months it would take to recoup the money spent). 

will you keep the LOAN at least that long? do you intend to refinance before then? what is the opportunity cost of those dollars not going elsewhere?

Any one of us could give you our two cents on the math of it, but only you can decide if it makes sense based on what your specific goals are. personally, i paid points on my house because my goal was lowest possible monthly payment. But we are all in a different boat an these decisions should be treated as such.

Yes! but i also 2nd @Jay Hurst's sentiments - get a 2nd or even 3rd opinion on DTI/ full doc. i personally love files that are puzzles, i get some weird satisfaction out of figuring out how to make it work on full-doc, especially when my client has been told "no" before. if it doesn't work now, a good loan professional will help you create a path forward. BOL!

This is awesome! it's been a while since i tried to fight this fight, i'll look into it more again tomorrow to see what updates ive missed! thanks for sharing @Dan H.

@Dan H.undefined

i think this is a decision only you can make. im in a similar boat (house hacking my primary) and considering renting the whole thing out to get a solo home for myself. certainly a lot of appeal in that, given how much work goes into the house hack. but whether or not the numbers on cash flow align is up to you. 

personally i dont think $150 (seems like about 12%?) in cash flow would cut it for me. i'd want enough to cover the mtg, but also R&M and a little for vacancy. if i can't do that plus have a little actual "cash flow" left over.... i'm still here :) if that's any indication. 

Hi David,

There are lenders that will allow you to purchase via a DSCR loan using STR income to qualify. However, they will not allow you to live in the property at all, full stop.

This is because DSCR loans do not follow/ pass consumer protection laws. when you live in the property, it creates massive problems for this loan type and the lender which would issue it to you.

For that reason, most of these lenders want to ensure you OWN your primary residence. Some will let you rent your primary and still do a DSCR loan on the subject, however, this would come with the added scrutiny of really documenting and evidencing you have no intention of moving in to the subject.

Fannie/ Freddie does not like multi-family with ADU. "why?" you ask? good question. they didn't have an answer for me when i asked either. they just don't want them.

SFR with ADU is no problem. but if you're considering adding an ADU to a multifamily property, consider the limitations you're creating on your back-end buyer if you decide to sell, or your own financing if you choose to refi.

I'll also add that guidelines change over time. just because they don't like it now doesnt mean they wont decide later to be okay with it. 

if you're W2 and full-time, hourly or salary, you should be able to go off your pay stubs for qualifying. Unless there is a reason to submit your tax returns, you could go w2-only. 

Some reasons you'd need to sub your tax returns: if you have a schedule C (self employemnt) or a schedule E (rental income). 

Another consideration is if you are not full-time, consistently, without gaps or missed hours. Anything the u/w can perceive as "variable income", even if its a shift-differential like nurses or firemen... "variable income" will require a 2 year average of income/ earnings to qualify. 

Still, you may not have to submit your tax returns. more info would be needed to know for sure, reach out to a seasoned loan officer for pre-approval and see if your situation would allow for this. 

Hi Bruce, i'll start by saying i'm a mortgage person, so please understand the context in which my response is coming from. 

you'd need to create CC&Rs/bylaws and establish an HOA in order to do this. You'd also need to establish a budget, and secure a master insurance policy. i THINK you need to do these things before reaching out to your municipality to have it converted officially with the county or city but they would be the first ask for steps in order.

i will add, this would make financing on these units a bit challenging, as in the mortgage world, at least initially, they would be considered "non-warrantable" condos. Tons of rules here which make a condo association "warrantable" vs "non-warrantable" but just one on the list: one owner owning the majority of the units alone will typically make them non-warrantable. This will affect things like required down payment, rates, and even which lending institutions would be willing to finance. 

i encourage you to look up warrantability for financing just so that you don't have surprisses when your 20% down buyer cannot finance that way. That said, I've been seeing the TIC (tenants in common) becoming a popular alternative to converting to condos. may want to look into that as well.

none of this is intended to discourage you from moving forward, just some food for thought. 

Hope this was helpful.