Am I being impatient?
10 Replies
Raina B.
from New York, New York
posted over 3 years ago
Ryan Potter
Investor from Louisville, Kentucky
replied over 3 years ago
Brian Adzadi
from Allentown, Pennsylvania
replied over 3 years ago
So let me understand this, you are already going to buy your primary residence with an FHA 203K Loan. But you saw a nice 6 unit property that you would like to put a down payment on. Since you are already in closing with your main house, you are kind of stuck monetarily in putting any offers in the 6 unit.
My question to you now is....Do you want to have a primary residence or a 6 unit? And what kind of financing will you do with the 6 unit? If its an FHA loan then you can't have your primary residence because its also FHA.
At this point you will have to clarify your intentions with this 6 unit and what specific kind of financing you trying to use to acquire it.
Raina B.
from New York, New York
replied over 3 years ago
@Brian Adzadi
The 6 unit would be for strictly rental income. Since my cash is tied up I was thinking about asking for owner financing for the downpayment and then the bank loaning me the rest. There are already tenants living there and paying rent. So there is an income to show off of It.
Brian Adzadi
from Allentown, Pennsylvania
replied over 3 years ago
You have to remember, lenders do not count the tenants rent as income, because anything can happen where all of a sudden you no tenants paying you rent (a bad storm, a fire, sudden surge in violence, terrorist attack, etc.). They want to make sure that when push comes to shove you have your own income to cover that mortgage payment.
Since you are just closing on your primary residence now, it may not show on your credit history around the time you apply for lending on the 6 unit. So its sort of a long shot but try if you must.
I , however, don't think you may get the loan for the property because you are technically taking out 2 loans almost simultaneously. Not saying it hasn't been done but for you its even harder because you are cash strapped.
Also where are you going to get the money to cover the closing cost for 6 unit?
Joe Villeneuve
from Plymouth, MI
replied over 3 years ago
The answer is partners.
Before that though, something that has been passed over and shouldn't have been by all those commenting so far. This is more important than all the rest, and will eliminate any discussion as to how/if to make the 6 unit work.
You're not going to get a loan from the bank for the 6 unit, if the DP is leveraged
Raina B.
from New York, New York
replied over 3 years ago
@Brian Adzadi thank you I have been thinking a lot about just waiting until my primary closes first. Especially since I do need funding for my closing cost as well.
@Joe Villeneuve I’ve thought of doing a partnership however I dont have the time to offer in trade of the equity due to my job. As well as I know very few investors or even people who could invest. In regards to the dp being leveraged, does It always have to be cash that you provide? How would this situation work with the brrrr method then. If you don’t mind explaining please.
Joe Villeneuve
from Plymouth, MI
replied over 3 years ago
Originally posted by @Raina B. :
Brian Adzadi thank you I have been thinking a lot about just waiting until my primary closes first. Especially since I do need funding for my closing cost as well.
Joe Villeneuve I’ve thought of doing a partnership however I dont have the time to offer in trade of the equity due to my job. As well as I know very few investors or even people who could invest. In regards to the dp being leveraged, does It always have to be cash that you provide? How would this situation work with the brrrr method then. If you don’t mind explaining please.
What time are you not offering now, that you can't offer to a partner?
Don't know any investor with money to invest as partners?...go find them.
DP must be a form of cash. The lender with the biggest stake, the other 80%, will not give you any money unless they are in first position for lien rights. If you already have a lien (a loan that is collateralized to the property) in the form of the DP, that is in first...and will remain first. The bank will NOT take a 2nd position.
The Brrrr method has nothing to do with this. In the Brrrr method, you pay cash for the property, then refinance your money back out (sometimes with more money than you put in). The refi loan takes the place of all current loans, or replaces the cash put in with the loan, and returns the cash to the original investor.
B = Buy
R = Rehab
R = Rent
R = Refinance (this is where the funds used (cash) is returned to the original investor)
R = Repeat = This is where the original investor reuses the original cash again
Raina B.
from New York, New York
replied over 3 years ago
The time I was referring to is the boots on the ground literally the running round and making the connections, the sweat equity that I guess an investor would want on my part of the deal.
Now I understand about the Brrrr thank you for clarifying that as well as the cash downpayment part.
Thank you for your explanation.
Joe Villeneuve
from Plymouth, MI
replied over 3 years ago
Originally posted by @Raina B. :
Joe Villeneuve
The time I was referring to is the boots on the ground literally the running round and making the connections, the sweat equity that I guess an investor would want on my part of the deal.
Now I understand about the Brrrr thank you for clarifying that as well as the cash downpayment part.
Thank you for your explanation.
As far as the question regarding, "I’ve thought of doing a partnership however I dont have the time to offer in trade of the equity due to my job. As well as I know very few investors or even people who could invest."...and you clarified the time in question as, "boots on the ground literally the running round and making the connections,...". If you didn't have a partner, were you not going to have to do all of these things anyway?
Raina B.
from New York, New York
replied over 3 years ago
@Joe Villeneuve
You are very right. I need to re-evaluate my expectations as an out of state investor. Have you invested out of state without a partner before, if so what steps did you have to take not only get the deal but to keep It?