Hi guys,
I am new to the Bigger Pockets Forum but have been listening to the podcast for over a year now. I am 27 years old and have been saving up to buy my first property. I have an accepted offer on a condo and my plan is to live in it for a few years (moving out from my parents house) and then look to buy a house (and house hack it) while renting out the condo. I had a few concerns/questions I am hoping the BP community can help me out with:
- My plan is to take out a conventional loan with a 20 percent down payment. If in 3-5 years I decide to move out of the condo and rent it out, will I have to re-finance the mortgage since now the condo will technically not be my primary residence? This concerns me as rates will most likely be much higher in 3-5 years and I will be heavily exposed to this risk. Any thoughts on ways to mitigate this interest rate risk? Also, I was told since my plan is to rent it out I will have refinance it with a commercial loan? What does this mean exactly and is this true?
- Concerned that this plan might put me in a bind when trying to take out a 2nd mortgage in 3-5 years. Do you guys foresee this being an issue? ....There are many factors that play into this obviously such as pay increases at my job, getting married etc.
- In regards to bullet above, when the bank looks at my Debt/Income Ratio will they be factoring in the rental income that I would be making on the condo
- I am questioning whether or not it is worth thinking about buying this condo under an LLC:
- Will buying under an LLC allow me to not show the debt in my personal balance sheet or does the debt flow through the LLC to my personal balance sheet? Again, looking for ways to lower my debt/income ratio so I don't have problems taking out a 2nd mortgage in the future
- If I buy it under an LLC, does that change the structure of the mortgage the bank will give me?
- In general, what do you guys think of this plan? Any major flaws or things to consider?
Sorry for the lengthy message but I have a lot of variables that are running through my head and want to make sure I am thinking about everything and planning everything out now so I don't corner myself years later.
Hopefully you guys can help me out here (hoping to go into contract this week on the condo!)
Thanks,
Stephen De George
