All Forum Posts by: Ryan Avila

@Tim Lucas

I had to go back and read the FHA sale-sufficiency test rules, because it's been a while. My original comment was correct, you can not use the owner occupied unit as rental income towards the 75% rental income that needs to cover 100% of PITI.

From FHA, "For qualifying purposes, projected rents (of rental units only, not the owner occupied unit(s)) may be considered as part of the borrower's gross qualifying income only after deducting the appropriate HOC vacancy and maintenance factor. Rental income may not be used as a direct "offset" to the mortgage payments."

Have you been through a self sufficiency test? I was not able to close on a loan due to this issue, so I have personally dealt with this before. 

I know know a way around this for some people, but I didn’t at the time and lost the deal due to not meeting self sufficiency. 

@Tim Lucas I never said you couldn't use the rents from the unit you choose to occupy. Of the projected rental income, which is included in the small multi-family appraisal, 75% of the rental income must cover 100% of PITI.

Typically, the appraisal will be based off the the assessor records.

@Judy Wang

If you are really considering flipping houses in Stockton, I would recommend that you partner with someone who really knows and understands Stockton. Its a very hit and miss city, a couple decent areas but A LOT of really bad areas. Based on violent crime statistics, Stockton is the most dangerous city in California and the tenth most dangerous city in the country. Also the poverty rate in stockton is almost double the state average. 

Im not saying its not doable, just saying find someone who knows the market. You probably wont want to find yourself flipping houses in war zone neighborhoods.  

@Saraya Thornburg 

Start looking in the local market, im over the river from you and I invest locally. I would suggest you look at the Jackson, Ione, Sutter Creek area. Its still a small town but your close to the valley and sac for stable renters with good jobs. Deals are everywhere you just have to look hard sometimes. 

In my experience, when someone says they “can’t get the site to work” it really means they are not actually qualified and they want you to sign the lease without doing proper screening on them. 

Yes, your lender should be able to give you a loan estimate that includes a breakdown of all the cost of the loan. 

@Cameron Sume

Couple of thoughts; First, always keep in mind that rents minus PITI doesn't not equal revenue. You need to factor in expenses. Vacancy, Maintenance and CapEx. Second, an FHA loan isn't really 3.5% down when you look at total cost. With FHA you have to pay 1.75% of the loan amount upfront in MIP (FHA version of Mortgage Insurance) plus closing cost. Closing and MIP are typically rolled into the loan but just be aware that your actual cost is much higher then 3.5% down. Third, if your in a competitive market an FHA offer is the least likely to be accepted. Especially if the sellers are getting cash offers or strong conventional offers (I.e. over list offer, little to no contingencies and 20% down).

Not saying it can’t be done just keep all of this in mind as you look for properties. Speak with a mortgage broker about your options. Also there are special loan programs available for certain people, Native American? First Responder? Both have special loan programs available plus many others, these are just two examples. 

@Hud Floyd

Great to see the large number for first responders on here, thanks for starting a thread we can all connect through. I am a Fire Captain for CAL FIRE, I work near Yosemite now but have been all over the state including Napa County, Butte County and San Diego. My wife and I live in Napa and are looking to purchase a house hack this year, we invest in gold country and would like to BRRRR another rental property this year as well. Also interested in getting into storage.

Just like most everyone else, I really enjoy my job and where I am at in my career but I would like to supplement CALPERS with REI, and give my wife the option to not work if she chooses.

@Tomash Gabyak

As everyone has already said you need to talk to more lenders, not 3 lenders try about 30 lenders and you will see how big the difference between them is. 

I was recently looking to refinance a private note on a raw piece of land that I own, most banks will not refinance a private note on raw land. I called 20 banks, got 19 no’s and 1 yes, but that 1 yes was all I needed to get the refi done.

This is a prefect example of why you should have a lender lined up and aware of your intention of doing a cash-out refinance PRIOR to purchasing a BRRRR. This will save you a lot of time and effort. And if your really not about to find a bank to help you, speak with a good mortgage broker usually they know of ways/people to get it done.