All Forum Posts by: Randy Marshall

I know the answer to this is no, but what I'm really looking for is a way to finance my first rental property. I've had my lender who I run client deals through (I'm an agent) do a few condo questionaires to the associations where I planned to purchase a rental unit. They all come back with investor to owner occupied ratio over 50% which they will not do a loan in. If the complex allows rentals, then of course that ratio will not be right, thus only allowing cash purchases or owner occupied loans. What kind of lenders should I be looking to do business with to get this done? I'd imagine they all can't have the same underwriting guidelines, some have to be more flexible, right?

sounds good. Thanks for the replies everyone. The unit I planned to buy fell through. The condo questionnaire came back not so favorable for my lender. He was able to put me into a different lender who takes on riskier loans like that but they needed 30% dp which I didn't have and they wanted to do a 15 yr loan. So I'm back looking in the market for the next deal. Just stashing cash from any closings I get as an agent. 

I took a loan on my 401k to do a flip but the whole deal fell apart and we lost the property. I deposited the check into my account to season the money anyway. Now Im looking at purchasing a rental with part of those funds and other funds I saved up. I work a full time job that automatically repays the loan through my checks, and I also do real estate as an agent. So my thinking is to front this deal with some 401K money and whatever I don't use I will immediately pay back. For the remaining balance of the 401K loan I plan to use some of the rental income (should I get the property) and commissions from my sales in real estate. 401K loans are not counted against debt to income with my lender. 

Forgive me if this a newb question, but how do you transition a SFR into a MFU 6-8? If I have multiple condos at different addresses can you essentially bundle them into a MFU loan? I'm assuming all this happens once you reach the stage of having around 6 units?

I listen to a lot of audio books and investing podcasts and all these investors (especially in the rich dad poor dad series) they always talk about writing everything off and to have a good accountant bla bla bla. So that makes complete sense, if you're purchasing properties with cash and don't need to show income. What's the point of writing every little thing off when I need to show some of that income for a lender? Makes no sense unless I'm missing something.

I see what you're saying. So after PITI & HOA fees, my net cash flow is about $360/mo. So after my write-offs if I still show positive cash flow on the tax return, will what's left on my mortgage for that property be counted against my DTI when I want to purchase another? Or since it's showing positive cash flow on my returns, would that not count?

I'm on the verge of doing my first deal, purchasing a condo unit as a rental. I've run the numbers every which way and it's a great first deal for me. My lender is running the numbers and he needs my DTI to be no more than 45%. I have a car payment and mortgage with my wife. My DTI with all that is at 46%. When I do my taxes, I am going to try and structure my real estate expenses (I'm an agent) to show some income which will put me just under that 45%. Question is, how the hell do people purchase so many units and build a portfolio? They likely have a mortgage (primary residence), car payment, then they'll have investment properties with mortgages most likely. So unless they're not taking the investment property deductions and claiming lots of income, it seems nearly impossible to purchase more and more units. Can someone please explain how to build a portfolio of properties with a lender?

Thanks for the replies and the link! It makes much more sense now.

If I purchased a 3 flat and I'm living in one of the units of a 3 flat, what's stopping me from moving out in 6 months, renting that unit, and then applying for a mortgage with another lender?

I understand the new lender would want to see rental income on that unit I used to live in, so say I rent it out for a year, go rent somewhere myself for a year, then apply for the mortgage, does that work?

Thanks, I was wondering about the end game too if we wanted to sell it some day. The particular unit we were looking at has been on and off the market for about a year. Seemed a little unusual as the management company and the resort itself is great! I spoke with an investor friend who foreclosed on his own unit in that complex when the crash happened. He said he loved the place. He mentioned that 35% goes straight to the management company and then you have your HOA dues. The management company cleans the unit. I was running some numbers and yea it didn't seem like we would make a killing on it but we would make some decent profits with the benefit of using it when its vacant and we have the opportunity. The management company rents it out for you (they rotate the units if someone just calls and wants to book) so it's good that they will fill vacancies. But it does sound like it eats well into profits. But since they fill vacancies on a rotation basis we figured it would be a load off our shoulders to market and try to get renters in their ourselves.