All Forum Posts by: Reid Chauvin

@Gabe Quintanilla - if you are looking at 1-unit properties you should definitely consider a conventional loan instead of an FHA loan. 3-5% minimum down payment and much cheaper Mortgage Insurance with your credit scores. If you are looking at multi-unit properties then FHA is likely the better play with the lower down payment option (it's generally 15% - 20% for conventional on multi-units).

Yes, you can buy off market deals with an FHA or Conventional loan, assuming the property is in a move-in ready condition. If it's not, then you could consider a renovation loan that will allow you to purchase a property that requires repairs, and fund both the purchase and the repairs in one loan.

Shopping around is not a bad idea - you may be able to eek out a slightly lesser monthly mortgage payment and/or upfront costs, and the products that lenders are able to offer may vary, but if you talk to too many different lenders it can start to get confusing/overwhelming with all the different options and information (unfortunately there are gimmicks and misleading individuals out there). Service levels vary by a great degree, so cheapest does not necessarily equal the best option, especially given that this is your first home purchase. 

Your situation seems pretty straightforward, so at most I'd recommend maybe getting 1 or 2 additional opinions from lenders recommended by people you trust or through this forum. Having a solid idea of what the monthly and upfront costs for purchasing a given property, and what you will be able to rent out the rooms/additional units for, is the most important thing here. 

@Leland S. - this mostly pertains to my experience with furnished finder, but my guess is that you are priced too high for MTR, and perhaps your property is not right for it in general. In my experience, both of renting out my place MTR in Nashville and being the renter of MTR's in other cities, renters are more budget conscious and price is really important because duration is generally at least a month. Most people are looking for a 1 or 2 bedroom place. Comfort is more important than 'high-end', if that makes sense. 

I have not rented out any of my properties through STR before, but have stayed at many places through airbnb and VRBO. While price still matters, I'm much more willing to splurge for a 'high-end' spot in a great location for the few days I'm there as I'm typically splitting the cost with friends.

@Tyler Youtzy - I'm not familiar with the commissioning process for the national guard, but if you are not currently in the service/making any income from being in the service, then getting a co-signer would definitely be your quickest fix. The co-signer will ideally have solid credit scores and will need to have enough monthly gross income to be roughly more than double their monthly debts plus your monthly debts (including the new mortgage payment). You could always refinance down the road once you have income of your own to get the co-signer off the loan. Hope that helps! 

Welcome @Tony Henderson! If you are short on the funds necessary to cover the upfront costs associated with buying an investment property, your options are as follows: 1) start with house hacking, i.e., leverage a low down payment loan, live in the house for at least a year with roommates, and convert to full-time rental thereafter; 2) find a partner or partners to purchase a home with and split the costs/profits (you don't have to be related to someone to be on a mortgage with them; 3) the most obvious one is to save more money. 

While HELOC can be an option, you will need to have some sort of plan for how you are going to pay that loan off. That will be difficult to do in this current rate environment if you are using the funds to purchase a buy and hold property. Might be viable for a STR though, not sure on the numbers there.

@Daniel Campos I don't see any problems here unless you already have an existing FHA loan and you are trying to use an FHA loan to buy the multi. Getting a signed lease on the home you currently reside in once you get under contract for the multi will definitely help your case, especially from a debt to income ratio standpoint. Work with another lender! More than happy to assist.

@Brad Miller - Many lenders will finance investment properties. The two things you will definitely need are decent credit scores (ideally 700 or above though you can get away with a bit lower), and cash for down payment (at least 15% plus closing costs and prepaids). Assuming you are self-employed, if you have 2 years tax returns and you're showing some income then you may be able to qualify for conventional financing. This is option 1 in my opinion as it is the more advantageous form of financing in terms of costs. If you are unable to show sufficient income, then option 2 is the DSCR loan which is underwritten based upon the subject properties income instead of your own. Option 3 is seller financing, but that is much more property/seller dependent.

Hope this helps. Feel free to reach out if you'd like more info! 

@Brooks Ryan - the biggest thing will be understanding rental rates in your area before you buy - don't just assume the property will cash-flow. Your realtor should be able to assist with that piece, or you can just find comps on Zillow. Also, I'd consider putting even less down, like 5%. Your mortgage payment will be greater, but that other 5% may be better served bolstering your reserves or invested elsewhere. I personally have not run into any issues with clients executing a quit-claim deed to transfer the property into an LLC, however it may not be necessary as long as you are properly insured.

@Nick Tarantino - I would only use the FHA loan if you are buying a multi-unit property or if you have lower credit scores (sub 700). The mortgage insurance is more expensive than conventional loan and you're stuck with it for the life of the loan (unless you put > 10% down). If it were me, I'd probably buy a primary in ATX with 5% down conventional loan, live in it for a year with roommates, then rent it out when I move to Florida. I'd then do the same in Florida. If you are unable to find a property in ATX or in FL that will cash flow like you want it to once converted to a rental, that's when I'd consider investing in other markets, which would entail at least 15% down on a 1-unit property.

Welcome @Brendan Simpkins! I've employed this strategy myself and Nashville is a great place for it. You can either have long-term roommates or you can furnish the other room(s) and have mid-term renters like travel nurses. If you don't already have roommates in mind, there are a few good facebook groups with people looking to rent rooms. Furnished Finder is probably the best site if you're looking for the mid-term renters. Other than making sure the numbers work, the only challenge I can think of is just dealing with roommate dynamics. It's a bit different when you're the property owner. Like others have said, screening the people that will be moving in with you, if you don't already know them, will be very important. Feel free to reach out if I can assist in any way! 

@Naseem Razek - FHA DOES allow you to use rental income. You will need an executed lease for the property, and 75% of that will factor into your DTI. Rental income for the other units of the multi-unit property you plan to purchase may be factored in as well, and the appraiser will determine what the 'market rent' is for those additional unit(s).