All Forum Posts by: Mark Feaver

Searching for a creative lender or guidance.  I will do my best to keep this straight to the point and concise.

1. One year ago purchased a triplex with FHA
2. Planned to move in and delivered 60 days notice to tenant
3. Tenant was unable to move and others were on a year lease
4. Just finished one year with the property and want to refinance to a non-owner occupied conventional loan to utilize the FHA loan again to buy a duplex. one that I CAN MOVE INTO.

My current lender told me because I had not actually lived in the property this throws a wrench in these plans. Again, we had every intent of moving in, but due to circumstances regarding tenant, their job and COVID it could not happen.
Can anybody point me in the right direction here?  (BELOW IS THE EXACT EMAIL I WAS SENT FOR REFERENCE)

Thanks!

EMAIL:

Ok Mark I have been racking my brain here on how we can get this done. I am so sorry that you were never able to move in. As you recall, we structured your purchase as an Owner Occupied purchase meaning that you were going to live in one of the units. I realize that what has transpired has been beyond your control but we are also in a rising interest rate environment too.

If we attempt to refinance this as an owner occupied property, it will be discovered that you truly don’t live there when the appraisal is conducted. In addition, all of your paperwork doesn’t reflect the property address so there is no way around it. Therefore, in order to proceed we would have to refinance this loan as an Investment Property. But in order to refinance it as an Investment, you have to have a minimum of 25% Equity in your home as the most you can borrow is 75% of the Current Value on 3 Units. (HOME IS WORTH APROX $330,000)

You currently owe $250,000 on your tri-plex and current rates on a tri-plex Conventional is 4.375%. Your new payment would be $1675.73 which wouldn’t make any sense to do as your current payment is less than this. I believe the best option is (when you can) get the tenant out of your home and move in. Once you move in we could refinance Owner Occupied at 3.75% but even then the payment would be $1,583.45

I wish I had better news for you but the fact that you are not living there really has thrown a wrench in this coupled with a rising interest rate environment that we are in. Please let me know your thoughts as the rising rates has take all of the net tangible benefit away from us.

Thank you for all of the information!  We purchased the property in January of this year with the intention to move into one of the units.  Due the tenants situation, we were not able to unfortunately.   

I do not believe that I have 20% equity in the property thus far.  (If I am wording that correctly).  I am searching for smaller banks/lenders that may have options for a lower down payment.  Realizing I should have specified that in the post.  But, I am realizing that I may either just need to have at least 15% down or wait to be able to refinance.

Hi, I will keep this brief and hopefully clear. I currently own one triplex (FHA) and seeking to purchase second multi-family (2-4 unit). I have a bit of a unique financial situation. Here is my current financial situation:

Three jobs

• Job A ($1700-$2000/month) part-time w/ 10 year work history
• Job B ($1200-$1400/month) part-time w/ 4 month work history (same profession as Job A)
• Job C ($400-$600/month) my business, with two years of tax returns.
• Total income/month = $3,300-$4,000/month.
• $98,000 in assets/liquid cash (Roth IRA, HSA, savings, etc.)
• The only debt I have is the triplex I currently own.
• I owe $251,000
• PITI = $1700/month
• Utilities = $405/month
• Rental income = $2400

I would like to owner occupy the second property as well, but I am not able to refinance right now into a conventional mortgage out of an FHA.

Thank you in advance!

Hi,

I currently own one investment property, a triplex out of California.  We just purchased it December 30, 2020.  I am looking to invest out of state for buy and hold and looking to do little to money down.  I am hoping you could provide your suggested markets and why.  I have looked at Indiana, Ohio, Texas and a little of Illinois.  I am not quite sure where to focus on.  Thank you so much!

I am most likely taking over a 3 unit property.  One of the tenants who is on a month-to-month lease will be receiving a 60 days notice to vacate as we will be living in that unit.  I would have the other tenants signing my new lease that has a few changes (renters insurance is a must, one of the utilities will be their responsibility as well, etc.).  But the gentleman who is receiving the 60 days notice, he would still sign the new lease for the remainder of the those 60 days?  Is there anything that I should consider?

One more question:  As I will be passing on the trash bill ($25.00) to the tenants, should I wrap that into their rent, but making a clear distinction that it's for the garbage and not a rent increase?  If I am able to put the trash in each of their names, they can pay it on their own, but if that is not the case, what is the best way to collect that additional $25.00?  I anticipate I will be using Cozy for rent collection, if that makes any difference.  

Thank you very much for taking the time!

@Nicholas L.

The current tenant in the ADU is paying $660 a month. The ADU most definitely could use some new tenant proof flooring, paint, and some other small yet impactful cosmetic touch ups.

Average rent for 3 bedroom similar to mine is ~$1,400-1,500

and the ADU I would say at least could get $700.00/month. But perhaps I should be more conservative with that number.

Thank you everybody for the responses.  I should have provided additional information.

I am using an FHA 3.5% down. House hacking. I have zero debt. Inspections are tomorrow (Tuesday).

As far as rules of thumbs go, in our area Lodi California, 1% rule would nearly not apply.  After total cash out of pocket (about ~$18,000) I will $5,000 saved for reserves, but plan on adding to that until about $10,000 is reserved.  But of course after inspections and appraisal, numbers may very well change.

I have spent the last 6 months analyzing properties. I have recently come across a property that makes sense from a cash flow point of view. We are having inspections done in two days.
My question is, if it were you would you allow the current conditions of everything that is going on right now play a role in your decision making of purchasing a buy and hold investment (keeping in mind the cashflow works)? I will include some rounded numbers below for context as well.
Home Type: 3bd/1.5 bath Single family home w/studio (good location). I will live in studio and rent out the SFR.

• Purchase price: $275,000
• Interest rate (locked in): 3.125%
• PITI $1,800
• Rental income while living in one unit (based on rental survey of surrounding homes) ($1,600-1,700)
• Rental income after a year and moving out ($2,100-$2,200)

Thank you all.

Thank you so much for the helpful information!  

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