All Forum Posts by: Zack Karp

@Michael Solomon congrats on what seems to be a successful house hacking journey.

Here's how this works. The lender is going to require your most recent tax return. If a property was placed into service as an investment property prior to that tax year, then the lender is going to calculate your qualifying rental income (or loss) from your Schedule E. (If there is no rental income listed on your Schedule E in that scenario, you cannot use any rental income, period, even with a lease.) If the property was placed into service as an investment property during that tax year, and there is partial year of rental income, make sure that you put the correct number of fair rental days on your Schedule E, and the lender will prorate it for a full year. If the property was placed into service as an investment property after that tax year, that's when we can use your lease, and we use 75% of the rent and wash that against the PITI (total mortgage payment).

So in your case, by the time you are ready to buy your 3rd property, your 1st property will be using your most recent tax return for your qualifying rental income. Your 2nd property will be using a lease, since you would be doing what's called a Conversion of your Primary Residence, which is when you buy a new primary and convert your existing primary to an investment property at the same time.

Hope that helps. If you are working with a lender that does not underwrite to these exact Conventional guidelines, run. And based on your questions, it sounds like the loan officer you are working with isn't doing their job coaching you, mapping out your game plan, and explaining all of this.

TYFYS and best of luck!

@Nikol Catino this might be doable. Depends on what you can get in rent on the condo, assuming you are converting this from your primary to investment at closing. Depends if you have prior rent history. Depends if you have other debt (car payment, student loans, credit cards). Lots of variables here that need answers to piece this puzzle together. I'd be happy to dive deeper, feel free to reach out.

@Austin Williams yes you can do a 100% cash out refi on your existing home with a VA loan, but keep in mind that you would need to finance it as a primary residence, which resets the 1 year clock that you need to occupy the property. But then in a year, you could buy another primary residence with your VA secondary/bonus entitlement with $0 down (yes having 2 VA loans at once), and keep and rent out your existing home. Meanwhile, you'll have that cash out that you could buy an investment property as well.

If you need any help calculating or mapping out what you could be eligible for, feel free to reach out. I've been doing mortgages for 27 years and I teach VA lending...I know all the tricks and nuances.

TYFYS and best of luck!

@Luke Hamlin you can buy a second home with 10% down with a Conventional loan. You don't need 20% down.

Sounds like a great plan. If you need a lender for that, feel free to shoot me a DM.

TYFYS and best of luck!

@Kenneth Joseph Perfido It really comes down to math and future goals. And one simple question...

Are you going to buy more investment properties, or invest in any way, in the future?

If the answer is yes, then it's a no brainer to make minimum payments on your 2.8% interest rate mortgage, and use the funds that you would have paid extra to pay it down faster, to either invest in more real estate, the market, or anywhere else where you can get a ROI > 2.8%.

If the answer is no, then feel free to aggressively pay it down as fast as possible, to become debt-free faster, and just have a large amount of money in savings or to splurge with.

The bottom line is that your 2.8% mortgage is GOOD debt. IF, you are being smart with your money. If you have no desire to actively pursue other investments where you make more than a 2.8% return, then by all means pay it off faster.

TYFYS and best of luck!

@Garrett Kula welcome to BP. Not sure what suburbs you are referring to, but I have a lot of clients that are very successful investing in areas like McHenry, Woodstock, Elgin, Antioch, Mundelein, Belvedere, etc. Yes the inventory is much lower than the City, but there are 2-4 unit properties to be had, and with good numbers. If you are patient, you will find properties that work.

But in the end, there is no right or wrong way to invest in real estate. SFD vs condo vs 2-4 unit, hold vs flip, turnkey vs rehab, passive vs active...it really comes down to each individual property/opportunity, what your goals with the property are, and if the numbers make sense or not.

Best of luck!

@Connor Chanter we underwrite 203K loans in house, and my niche is working with investors. If you need any help or have any questions feel free to reach out.

@Amy Falson welcome to BP! I'm right near you in Gilberts and specialize in working with investors and house hackers, I've worked with dozens (maybe hundreds) of BP members on their financing over the years. Let me know if you have any questions...there are so many nuances when it comes to lending guidelines, getting the best terms, and setting yourself up in the best position possible for properties 2,3,4 and beyond as you build your empire. The Elgin area is the perfect place to start your journey, it's a very successful starter area for investors. Happy to map out your gameplan with you, feel free to reach out anytime.

Best of luck!

@Jose Ignacio Prieto

If buying as a primary, you need to be able to occupy a unit within 60 days of closing. Sounds like you are aware of that already. What I have seen successful in this situation:

1. Push the closing date to 59 days before the end of the first lease that expires (assuming you will be occupying that unit, even temporarily until one of the other units are available)

2. Have the seller offer the tenants a "cash for keys" to break one of their leases early. You might need to fund that, either with a higher purchase price, or something creative.

Otherwise, there are no other options that would allow you to qualify to buy this as a primary residence. One of the units needs to be vacant within 60 days of closing, and there is no bending to this guideline.

Best of luck!

@Jonathan Klemm thanks for the tag!

@Jacob Nevarez I agree with others here, the 2-4 unit house hack is the way to go. Some of the other financing info here is a little off though. You can buy a 2-4 unit with a Conventional loan with 5% down. Have you gotten preapproved yet to know what you can qualify for? That may determine or sway your location. Let me know if I can help you with that, I am local here and my niche is working with investors and house hackers, I have worked with hundreds of other BP members with their financing. Feel free to shoot me a DM if you want to connect.