All Forum Posts by: Mat O'Grady

Has anyone run into issues using it for real estate?

@Ryan Tessier

When you say the DIL's family are all vouching to support her financially, are they willing to cosign the lease with them and be responsible for the rent? I run a background check on all consignors and make sure they can also afford to pay the rent and they would care if they had an eviction on their record. 

Any lender fees from getting a loan, monthly taxes, monthly insurance, utilities and maintenance fees.

@Michael Donovan

OK, the banks could be looking for 6 months of reserves for payments. So if your debt obligations are 4k a month, they may be looking for 24k in addition to whatever money you are using for the down payment.

You could look into getting a line of credit or home equity loan on your house to help with a down payment or for cash reserves. I believe most banks will want the money to season in your bank account for a couple months before allowing it as a down payment. 

@Michael Donovan

At first glance, it sounds like you shouldn't have any issues getting a mortgage. 

The bank will look at your DTI (Debt to Income Ratio).

Hypothetical numbers: 

Wife income: 20,000

Primary expenses: 2000

Son's house expenses: 1000

Car Payments, credit card payments, other loan payments: 1000

They would say you are your debt payments are 4000 and your income is 20,000 so your DTI is 4000/20,000 which would be .2 or 20%.

If the banks limit is 40% you still have another 8,000 in debt payments you could afford each month for other mortgages. 

Since your wife is the only one making money, it would probably be better to get the loan only in her name. 

Where is the down payment coming from?

@Victoria Imlach

You could talk to your agent about putting in a contingency for a vacant unit. That would mean there would need to be a vacant unit before you can close. This could make you lose the deal though if other buyers are willing to purchase without a vacant unit. 

You will need to find out if the tenants are on a month to month lease. If they are, then you can serve a notice of non-renewal. If they are NOT on a month to month lease, things are more complicated. The lease goes with the property, so if the lease says "$500 in rent until 2023" you are stuck with it, unless the tenant violates the lease or you can work out an arrangement with the tenant. 

If the lease is month to month, you could ask for the seller to serve a notice of nonrenewal before you close, but not require the tenant to be out before closing. One of my friends is in the middle of a deal like this. He is hoping the tenant is out before they close, but if he is not, at least the process has been started.

If the lease is month to month and after the given date for them to move out has passed and the tenant does not move out, I suggest hiring a lawyer to handle the eviction process for you. Normally, I would suggest you read up on it and try it yourself, but right now, the eviction process is very complicated. In the past, it has taken me at least 3 months to evict a tenant. In this environment, it could take much longer. 

Hopefully, one of the tenants is on a month to month lease and is cooperative with moving out. Although, it sounds like they are getting a great deal on rent, so they may be reluctant to move out. 

Good luck!

I believe if you live in a four unit or less property, you can discriminate against anyone for whatever you want. Not saying that I would...

@Andrew Jambor I sent you a private message. 

Ted Lanzaro is an investor and an accountant. Whoever you get, try to get them sooner rather than waiting. They get busy.

@William Collins That's awesome. Congrats!