All Forum Posts by: Lynn McGeein

It seems to me that no one would have to turn anyone in for HUD to find out you are buying as an owner-occupant but flipping instead because as soon as you bought the second Homepath home within a few months, unless you've figured out a way to use different social security numbers and/or names, then they would already know. If a person was doing this enough to draw attention to themselves from another investor, HUD should already be well aware of the problem. But I certainly don't see a problem if the person is truly buying to live in it and fix it up, then sell it a year later or whatever the current definition of owner-occupied is with Homepath. It would be a smart way to start out, and I've told my son he should look into it, buying a Homepath for little down and no PMI, fixing it up and selling it or renting it out in a year or two until he builds up enough to really buy a place where he wants to settle down. He could build up a nice real estate portfolio that way, moving every year or two and always getting low downpayment loans.

Definitely watch out with multiple applications for the same thing if it's not in a 2-week period. We moved to a new state recently, so figured short-term rental best until we find a great deal. Credit dropped over 40 points in last year and reason given is too many inquiries and too high balance on the credit card.

We thought we were being smart keeping a pre-approval letter active as the great deals seem to go same day around here and most want a pre-approval with the contract. Naively thought if you hadn't bought a house yet, renewing the pre-approval wouldn't affect your credit, but apparently the hits every 3 months are affecting us greatly. So we're actually being punished credit-wise for the common-sense strategy of living in a short-term rental, waiting for a great deal, and being ready to move fast when it comes.

And why have a credit limit if you can only use 30% of it? Seems to me the bank would want to just lower your limit if you're never going to use it, starting a vicious cycle of lower limit, lower 30% figure. We pay it to zero once or twice a year, and could pay it off any time but would rather keep cash on hand for downpayment or reserves on property. We've had it forever and it's a great rate, but balance is high when we fix up a property or pay our kids' tuition with it (rate is as low as student loan I could get), and apparently, that's enough to ding our credit. Ridiculous.

James, You have to search for lenders actually willing to do the 5-10 allowed, but they are out there. A local real estate club might have referrals. A real estate agent pointed us to a lender that would work with the 5-10, so you might try that route as well, and her fees were surprisingly as low as the regular mortgage people we were speaking to. We found that your credit score must be higher than for the first 4, and higher reserves, and no way so far around the new 25% down for investment loan unless you get a Homepath property. I'm learning, though, about hard money lending and other alternatives on these forums, especially for over 10 properties, so may be a different avenue, although much higher rates, but it could be your solution if you found the right investors.

Jarred, Don't pay a service and don't pay a site for your credit report. I believe the IRS webpage has a link (make sure you go to a .gov site for the IRS) to screen your credit once a year for free. See exactly what's reported, and research online for free the fastest way to fix it. I've found that even without late payments, they can drop your credit score for silly things like moving more than every 2 years. Just found out they'd rather you have 2 or 3 credit cards with under 30% of credit limit balance than have just 1 credit card with over 50% balance, even if it's paid down a lot.

This is a great thread. Every time one of my tenants gives notice, the fear kicks in ... turnover costs, how long will it be vacant, what if investing in these uses all our savings, etc., makes me want to sell them all and not deal with it any more and certainly not buy any more, even though our goal is to buy at least 5 more in the next 5 years. So it's not just fear of taking the initial step, it's the fear that comes at each and every stage.

Then I remember why we're doing this, to be financially independent in 15 years and have rental income coming in from multiple properties so even if one or two are vacant, we still have income to rely on.

I read once that every life has problems, but the key to living well is choosing the problems you want (the ones we have some control over, of course, not illness or injury). If we take on real estate investing, we know there will be vacancies, maintenance issues, emergency repairs, etc. When I keep in mind that we chose to have these problems and solving them can make a better future for us and our children after us, it calms me down and helps me think more clearly, not just react to the fear of the moment.

In my opinion, that's much better than having problems forced on you like no retirement if social security is bankrupt when we qualify for it or someone has raided the pension fund we relied on and now we have nothing but the minimal government guarantee instead of what we were promised. When I'm in panic mode, my husband reminds me that he's never met anyone who regretted having houses paid off and rental income later in life, but he's met many who wish they had more to fall back on when they retire.

Kristin, Nice to meet you. Prices are finally dropping enough around here to make investing in VaBch interesting again, although so much competition around here it's hard to find a good deal unless you're searching daily and ready to move fast. We've missed a few as we're splitting our time between the two cities right now and the timing is always off, but hopefully more time to concentrate on one or the other over the next few months.

If your job is in the same field as your current job or your recent college degree, 2 paychecks works fine, at least in my experience. If you stopped working in your field and became a self-employed real estate agent, for example, I believe they want at least 2-years tax returns for that field, and even then, it's difficult as you don't show much income after expenses as a self-employed businessman, a benefit in any way except qualifying for investment property.

And unless you plan on working 80 hour weeks, you'll have plenty of time to research, learn, even get your real estate license and work part-time for a firm as that business seems to be very busy nights and weekends when people aren't working. My husband and I have bought our properties, picked a Thursday to close, work on it all weekend and, with the right planning and workmen scheduled, have it ready to rent out by Monday. You can probably even do lots of research & viewing property on your lunch breaks. I guess all I'm trying to say is I think the smart thing to do is use the field you know now and can get paid well for, even if it's boring, just for a few more years until you've at least got a few properties in your name and build a net worth and two years of rental income so it can help you qualify for mortgages once you are self-employed. And maybe it will be less boring if you see it as part of a master plan you've chosen for yourself to get ahead, an answer to a problem so you'll be sure to succeed in the business you really want to be in.

Maybe your next step is find a good loan officer and talk to them about what actually is required to qualify for mortgages and how hard it is these days to get a cash-out refinance of a rental property that you've paid cash for. It's not as easy as it used to be.

Bryce, Full disclosure, I have a son your age so my opinion is skewed. Highly recommend starting to build your real estate portfolio at your age, wonderful idea and shows you are on the right path. However, please think very carefully about full time vs part-time. If Austin is where you want to be, and I'd research all markets as you are young enough to establish yourself anywhere, start looking now for a job using your degree in the same area where you want to invest. I imagine the actuary field, however boring you think it may be, pays very well, and nothing helps with qualifying for financing more at your age than a good paycheck. If that is too boring, there are so many well-paying opportunities for someone with a math degree, but stay out of the field too long and you will find it more difficult to get back in later.

You will find it very difficult, no matter what your downpayment, to find a loan as a newly self-employed real estate agent, and there is no reason to pay cash, even if you can, when financing is so cheap and you can get 30-yr-fixed at 4.5% or less. Think of your math degree as a golden ticket to purchase real estate. It should not be wasted, even if you only plan on 3-5 years more of employment until you qualify for all the financing you want.

Thank you all for your kind welcome. Learning more every day. Love this site.

Thanks, Joshua! But not really my idea -- read it in a book somewhere along the way, and just seemed to apply in her situation.