All Forum Posts by: Zach Wain

@Ari Steinman - if you are asking lenders for interest rates be sure to ask interest and discount points, because interest rate is 1/2 of the equation.  If I can get a 6% 30 yr fixed on a rental, that sounds great, until I tell you its $30,000 in discount points to buy the rate.  Rate + discount points!

Any conventional loan in America is not allowed to close in a LLC. You must either close in your name or in the name of your trust. But, you can move title to your LLC immediately after closing. Fannie Mae is fine with this as long as you are the majority member of the LLC.

What downpayment are you looking at?  If you want the best deal, rental properties with 25%-30% down are getting better financing terms than 15%-20% options. 

Only DSCR loans will have PPP (prepayment penalties) and they range from 0-5 years depending on the lender and what you want. You can take a higher interest rate and select a 1 yr PPP for example. Or, maybe you want a lower rate and you are ok with a 3-4 yr PPP (which is too long IMO).

I am not sure what you mean by "supplement" to the loan after you raise rents.  Can you explain?

Super generically speaking ya, that was normal a couple days ago, a touch higher today. Primary home or rental? Credit scores? The company you work for does not impact your pricing. Loan to value, occupancy, credit scores, and loan type (conventional, FHA, etc) are the big ticket items.

Lastly - what are the origination fees?  Rate is 1/2 of the equation, origination is the other.  I can get you a rate of 4.75% but I have to charge you $100,000 in origination fees for it.  Is that a good deal?  Of course not.  Origination fees are tough to avoid in this rate market right now, but you need to be aware of them in your decision making process.

A duplex may work if you can find something sub $600k. 3.5% FHA downpayment. If you have a toddler you may not be comfortable house hacking. If the duplex does not work, see what the Condo market is like and buy a primary home. Live in it for 1-2 years and save more money for your next purchase, then convert that condo to a rental property and buy your next home.

@Michael Littleton - The 2nd home option allows you to only put down 10%, but you can not use rental income to qualify.  And, it needs to be in an area that makes sense for a second home.  Common sense.  Would you buy a vacation home 10 miles away in a similar location?  No.  What about 100 miles away?  Maybe.  Why is it a second home.  Do you have family there, is it on a lake or beach, etc etc.

Once you get at least 1 full tax return done with STR income that will help a lot. But, do yourself a favor and consult with a lender before your CPA writes everything off. CPA's usually do their job only, and save you money on taxes, but if your rental losses $30k because of excessive write offs it could make your long term goals more challening.

Text prep with a draft, discuss with your lender before filing, and put yourself in a position to win. And yes, DSCR is an option too.

how did everything end up?  We need some closure

To review - DSCR rates of sub 7% are available, but with VERY large downpayments and max Pre payment penalties duration and cost. For people that might be looking at 25% down and only a 1-2 yr PPP, you will still be looking at the 7.5%-8.5% range. 20% down, and the rates go higher

@Carlos Hernandez - Do you need rents to qualify?  That would be a good thing to review and understand before you start looking at properties.

 To be honest, all lenders care about is that you meet the program guidelines.  Your debt to income ratio could be at the max allows of 50.00% (in some scenarios, just an example) or 5%, its the same approval.  They really do not care, you just need to fit in the box.

Just thinking out loud, but if you want the condo as a rental, why not buy the condo and live it in for 1 year and then move on to the home you want.  You will get such a better deal, its crazy!!!  Unless you truly hate living in condos and that does not work for you.  But, it would save you a ton of $$$$.  

@Jacqueline Floyd - I am confused.  You dont want to buy a primary home because you think the market may get worse in the next year or two, but instead you want to buy a rental property?  Aren't you faced with the same (possible) issue either way?  Rental or primary, you still own a home.  I think owning a home is a good thing and I personally do not think we are going to see a market correction in most areas, but that is my opinion.

When you decide to buy, you can put as little as 3%-5% downpayment for a primary home and get a better interest rate than a rental.  Primary homes are a way better deal when it comes to financing.  Live in the home for 1 year, after that you have met your occupancy requirement for the lender and than you rent that home out and buy a new primary home the next year.  You can do this over and over, to 10 properties.  

Buying a new home every year will help you "dollar cost avg" so you are using the law of averages for when you buy a home instead of getting lucky and timing the market.  Most people fail when they time the market, but if you buy a home every year or two with 3%-5% down than you get in for cheap each time...

They need to speak with a lender who can pull their current entitlement charged for the current loan, and then they need to tell the lender what County they want to buy in and how much of a home and downpayment they plan to purchase.  Then the lender can run the math.  It depends on the details whether its a yes or no...