All Forum Posts by: Renee Z.

Renee Zhang multifamily properties in the DC market are few and far between. Areas of DC you can find them but not for the price point your looking for.

Have you looked into purchasing a multi family to move into? That could give you more cash flow for qualifying income. 

Fha should still be 3.5% but you can only have one the at a time, so yes to refinancing the condo.

I have 6 properties, 12 total units and they all have mortgages on all of them; I do not have that much more income than you (about $1000 more). My advice is to find another mortgage broker. With almost all my properties I have been told no at least once and had to find another lender. Don't go to a bank, find a normal mortgage broker, they seem to have less stringent rules. I have never heard about the 100 mile rule and I would argue that it is not a normal thing (my properties are all over the place). I have even had different mortgage brokers calculate my DTI differently. Also, some will use the lease you will get on the condo as income and some won't unless it has been rented for a year, you have to find the right lender. Also, do NOT do another FHA loan. Do a conventional loan at 5%. FHA does not allow you to get out of paying mortgage insurance unless you refinance, but a conventional loan allows you to once it appraises at 75% (meaning you dont have to refinance and get a higher interest rate if it is now an investment property). ALSO, with a conventional loan, you can actually "buy out" PMI for a flat rate price depending on your credit score... this could save you money in the long run and also make your payment less, therefore making it easier to get approved on the new loan. My last piece of advice is to always pay attention to the income the property is going to bring in, in relation to the mortgage payment you will have. Your condo is not a good rental property because it does not cash flow enough and therefore is not only a bad investment for that purpose but it also makes your debt to income ratio to high. It sounds like you are doing the exact same thing again..... meaning that if you find a way to buy this new property, you might not be able to buy another after it. The rent on my properties are double the mortgage payment, which has made it a lot easier on me. If you are serious about being an investor, you need to focus more on that, than where you want to live.

I have 6 properties, 12 total units and they all have mortgages on all of them; I do not have that much more income than you (about $1000 more). My advice is to find another mortgage broker. With almost all my properties I have been told no at least once and had to find another lender. Don't go to a bank, find a normal mortgage broker, they seem to have less stringent rules. I have never heard about the 100 mile rule and I would argue that it is not a normal thing (my properties are all over the place). I have even had different mortgage brokers calculate my DTI differently. Also, some will use the lease you will get on the condo as income and some won't unless it has been rented for a year, you have to find the right lender. Also, do NOT do another FHA loan. Do a conventional loan at 5%. FHA does not allow you to get out of paying mortgage insurance unless you refinance, but a conventional loan allows you to once it appraises at 75% (meaning you dont have to refinance and get a higher interest rate if it is now an investment property). ALSO, with a conventional loan, you can actually "buy out" PMI for a flat rate price depending on your credit score... this could save you money in the long run and also make your payment less, therefore making it easier to get approved on the new loan. My last piece of advice is to always pay attention to the income the property is going to bring in, in relation to the mortgage payment you will have. Your condo is not a good rental property because it does not cash flow enough and therefore is not only a bad investment for that purpose but it also makes your debt to income ratio to high. It sounds like you are doing the exact same thing again..... meaning that if you find a way to buy this new property, you might not be able to buy another after it. The rent on my properties are double the mortgage payment, which has made it a lot easier on me. If you are serious about being an investor, you need to focus more on that, than where you want to live.

WOW! Thank you so much for your honest advice, Seth! I can't appreciate it more. I think you are absolutely right. We have been thinking about this the wrong way and we are trying to make the same mistake and probably won't be able to get a third place. While exploring more options, we will also seriously think about your advice and re-evaluate! Thanks again! 

You'll be able to figure it out. Your mortgage advisor is not very creative it sounds like. Here are a couple suggestions:

1. If your next purchase is a true multi-family (duplex with 2 meters), then you will indeed need to put 20% down even if you will owner-occupy one side. However, if you purchase a regular single-family home with a mother-in-law unit in the basement, you will be able to use a 5% down conventional loan. The key is what the property is official zoned as.

2. Regarding the problem of having too much debt to income due to your existing mortgage, here is one possible way to get around that. Many banks will consider the rental property a wash if you can show them a signed rental lease to prove that you will have income on it--even if those renters have not yet moved in. What you need to do is find a renter to sign a lease for your house in advance, say for $1600/month. The bank will look at that signed lease and count 75% of that rent income against the mortgage. On their analysis, it will bring in $1200 against your $1300 mortgage, thus leaving you with only $100 of monthly debt. If you can do this, it will free up your debt-to-income ratio to qualify for the next purchase.

I just saw Chris' post, exactly the same idea. Hope that helps!