All Forum Posts by: Priscilla C.

Quote from @Benjamin Aaker:

Quote from @Priscilla C.:

Quote from @Benjamin Aaker:

Since you will be renting it out you should get a conventional loan. What would you do with your current residence if you planned on living in the new one to get an FHA loan?

Ok yeah we are thinking of getting an investment property loan so we can stay in our current home.If we did the FHA route we are considering on living in the new property for 1 year and then moving back into our old one after the year is up.We are curious if we would get a more favorable rate if we borrowed from our home equity to buy the investment property.Do you have any idea if many investors borrow from their home equity to get started?

Yes, you can get a HELOC on your primary residence. There are risks as you are tying up your primary residence in the project. Failing might mean losing your house. If you do want to go this route, make sure that the underwriting of the investment property pays back both its mortgage and the monthly HELOC. If it can't, then don't consider it.

I see yeah definitely risky most likely won’t go this route but will keep that in mind.Thank you for your advice!

Quote from @Zach Edelman:

You could also go DSCR if you're DTI does not qualify for a conventional loan and you'd still be at 20% down on DSCR. You can also partner up as well/have multiple people on the loan for down payment purposes!

Hm that is an option.Our DTI is very good so we would probably go the route of just doing a conventional loan or FHA.Do you know the cons to a DSCR loan?Would it be less favorable then a conventional loan or FHA?

Quote from @Konstantin Ginzburg:

@Priscilla C.

Either one of those options should work for you. It simply depends on your time frame, when you want to actually begin renting the property out short term, and what the loan terms are. A primary residence will most often provide more favorable loan terms so if you are willing to wait one year while you living in your new property and are comfortable with renting out your primary residence to a tenant, then getting something such as an FHA loan is a good strategy to minimize your upfront costs and hopefully get better loan terms. I would just take into account that a lower down payment will mean a higher monthly payment so be sure to run the numbers conservatively in order to ensure your STR revenue is able to carry your monthly payment with this higher mortgage cost.

I see.We want to start renting out the 2nd property right away.That definitely is an option.Do you know if many investors use their home equity to buy a property?Would that have more favorable loan terms?We are also considering an investment property loan so we could then stay in our current place and then rent out our 2nd property.Thats a good thing to keep in mind about STR revenue.How do you usually run your numbers and know what revenue to expect before buying a property?

Quote from @Benjamin Aaker:

Since you will be renting it out you should get a conventional loan. What would you do with your current residence if you planned on living in the new one to get an FHA loan?

Ok yeah we are thinking of getting an investment property loan so we can stay in our current home.If we did the FHA route we are considering on living in the new property for 1 year and then moving back into our old one after the year is up.We are curious if we would get a more favorable rate if we borrowed from our home equity to buy the investment property.Do you have any idea if many investors borrow from their home equity to get started?

Hi I am a current homeowner and want to get a 2nd property for short term rental.I am wondering what would be the best course of action in terms of getting a loan for an investment property.Would you recommend getting a FHA loan or other conventional loan and living in the property for 1 year before renting it out and then renting out our current home or getting an investment loan and start to rent out the investment property?We do not want to borrow our equity against our current home to fund the investment property so just looking for ideas on how we should go about doing this.Thank you in advance for your answers.