2 YR requirement to add RENT for DEBT/INCOME ratio

Starting Out
9yFollow

2 YR requirement to add RENT for DEBT/INCOME ratio

Mia Edgar
Investor · San Diego, CA · Member since 2015 · 45 posts · 4 votes

Hi,

I was wondering about my 'next step' in investing and this is my situation: currently military and moving to Groton, CT for 6-12 months for training. I have been pre-approved for up to $300,000 to purchase a multiplex. I already have a duplex out in San Diego that has a very large 'debt' through my VA loan which I already have half rented out and am going to rent out the other half when I move. Cash flowing very little due to the SoCal high rent/purchase price. My mortgage lender used 75% of the current lease (1/2 of the duplex) to factor this into my debt/income ratio since I don't have the second lease finalized yet with a new tenant.

My question is do I try to buy in Groton, CT with an FHA loan and continue house hacking factoring in property management and likely will move away or wait till I move again possibly to Bremerton, WA to purchase a multiplex there where I will be for atleast 3 years. I'm afraid buying in CT will hinder me for another 2-3 years to house hack again in my next location since banks like to see 2 years of landlording experience. I have a decent 'nest egg' that I would like to continue to house hack and use FHA loans as I go.

All thoughts welcome.

Thank you

0Reply
52 views

4 Replies

Jump to latestLatest
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Mia Edgar,

    The 2 years landlord experience is a VA loan thing, not a FHA loan thing.

    In general it is hard to get departing residence rent to count when using FHA financing, but it appears your scenario fits the "job transfer >100 miles away" exception.

    In general though, you're eventually going to hit a road block if you limit yourself to FHA and VA loans. When that happens, remember: don't put the financing before the property.

    0Reply
  • Cameron Norfleet
    New Haven, CT · Member since 2013 · 222 posts · 134 votes
    9y

    If you're only going to be in CT for 6-12 months, just rent. 

    0Reply
  • Jaclyn P.
    Investor · Groton, CT · Member since 2015 · 97 posts · 28 votes
    9y

    @Mia Edgar I think 6-12 months would be a good time frame to house hack and then sell, unless you wanted to keep it as a rental.

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    9y

    I would move to Groton into a month to month rental.  You can look for a good investment property and if you find one that the numbers work as a long term buy n hold including management fees then purchase it and do your house hack until time to depart (6 to 12 months).  If you do not find it then you are only renting 6-12 months.

    It would be a fairly rare case were it would be worth buying and then selling in as short term as 6 to 12 months.  There is the cost of loans (possible points, inspections, mortgage broker fee, etc), the cost of selling (mostly realtor fee).  You would likely need ~8% appreciation to break even.  I will leave room for an exception if you find a property were you believe you can get significant force appreciation (convert a 2 BR to 3 BR, make a duplex into a triplex, appreciation for a rehab, etc.).  This would basically be a flip that you would be living in while performing the work to flip.

    Good luck

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free