All Forum Posts by: Nate Bartlett

Sorry if I wasn't clear, @Jonathan Taylor. Not 15% AND no points, but 15% or points. Both 20-25% plus points are what's hurting us. 

We are going to shop around a bit and just see what other options exist for us. If nothing better comes of it, we will have to adjust our strategy. 

Understood, @Jonathan Taylor. I'm certain my broker is referring to origination points. She also mentioned buying down the rate with points. 

I think what's making it a hard pill for me to swallow, is that every investor that I've spoken to has said that for a SFH investment loan, we should be able to get a 15% down payment. My mortgage broker is telling me that in the current market, that's not possible. I like her and would like to take her word for that, but that might just be with the lenders she shops too. So add that with the points, it's knocking us out of the game with properties that we are looking at. We are just a bit short on cash to close.
 

I agree. Honestly, if they gave me the option, I'd say give me the higher rate. I'm trying to get in the game, and I can always refinance later down the road. 

 Solid advice, Nathan! Thanks. This is what we were leaning towards, but didn't know if we were missing something. 

Thanks for your response, Theresa. I think it could benefit the landlord even more because he does or did own a RE brokerage. He may have retired since then and passed the business down to his daughter. So they would surely benefit in some form from that.  

If we weren't buying this home, we'd probably be looking in the $650k range. The benefit of buying the rental would be ending our lease early. Instead of "throwing money away" on the lease, we'd at least be paying down a mortgage and reaping the benefits of appreciation. It's just the extra $1,100 payment, which we could afford, that gives me pause. 

As far as the loan term, we were already pre-approved on a 30 year fixed conventional.

Thanks for the advice @Steven Foster Wilson!

Thanks @Michael Dumler!

We have been renting our home for 4 years at $2400. The landlord is happy with us because we always pay early, and take care of the home like it's our own. He has continued to renew our lease at the original rate and will probably continue to do so for at least a few more years. Our current lease expires in just over a year, May of 2023.

We are in a position to buy. Have 5-10% for a down payment, reserves, and are pre-approved for well over what the house would sell for. I had an idea to approach him and ask him to sell us the house. He knew that we eventually might want to buy it, and agreed that he would sell it to us when we were ready. I believe that he would end our lease early and sell us the home. The upside for him is that he built the house 4.5 years ago, has no mortgage, and gets the benefit of the crazy appreciation. When he originally rented it to us he was listing it for sale at $385k. Comps are now selling for ~$500k in our subdivision. He could easily cash out and walk away, while also helping us. 

Here's the part I'm unsure of. I know RE prices will continue to rise this year. Again, if we continue to rent, our payment is $2400 for at least the next 13 months. If we were to buy it with 5-10% down right now, our payment with PMI would be about $3500.00. Does it make financial sense to buy the house? We don't want to rent forever, and we also don't want to be in the position next year where we will be priced out of the type of home that we want because of the continued high appreciation.

We also have goals to invest in STR properties soon, so we would like to keep our reserves in good shape. We had considered just continuing to rent and buying an STR now so that we could start cash flowing right away which would put us in a better position to buy in the future.

Any advice would be greatly appreciated. 

Thanks

My wife and I are looking to invest in a single family short term rental property. We've had our fair share of hurdles since making the decision. The newest one is that our lender just told us that we will have to pay 2 to 2.5 points for the investment loan. This of course is taking away a good amount of cash that we had considered using for our down payment. And since we are using an investment loan, we are required to put down 20%. This has lowered our purchase amount so much that we are now not finding any turnkey properties that we would feel comfortable listing on AirBnB.

My question is, do all lenders charge points? The person we are working with is an investor-friendly mortgage broker. Would we be better off going directly to a bank or credit union? Do they also charge points?

Thanks for all the comments. We spoke with our loan originator today. She said 20% would be possible, but our interest rate would be higher. She said that 15% would "not happen." 

Once we settle on a property and make an offer, I think we will shop around to at least a few more lenders.