Strategy for first home for Investment Income

3 Replies

Hi everyone, 

I am in the Tampa Bay Florida area and I have a pretty unique situation that I am trying to navigate. Sorry if this is long winded just trying to include all details. 

About 5 years ago I went through a very expensive and difficult divorce. We both ended up filing for bankruptcy and it was discharged about 4 years ago. After that I worked very hard to rebuild credit and do all the right things. I rented for a couple years then was able to secure private mortgage financing for a home purchase. The obvious downside to this is the high interest rates. The good news is that I have my career has been going well(same employer for 21 years), I earn about $125,000/yr, and my credit is now around 720. I also have virtually no debt other than the mortgage. My plan was to refinance into a normal loan as soon as possible. 

 I am getting remarried next month to the person I've been with throughout most of this "rebuilding" process. She has never had a mortgage or home, has good income and great credit. We have talked alot about having some type of rental property, and we were trying to think of how to leverage her perks as a first time home buyer to help accomplish a second property. 

So we thought about options like refinance my current home... Have about $50k equity... Use to put down on new purchase for with her, we move there and rent out current home. Or just refinance and not pull cash out but have her and I apply for a low money down option for some type of income property.(we like the idea of condos by the beaches we live by for vacationers). We both have some 401k money we could utilize for down-payment possibly. 

Our goal is to be able to have a few streams of income coming in so that we can support a comfortable retirement. I am 37 and she is 34 so we are a ways out from retirement and are trying to just get started. 

Appreciate any input! 

I would re-fi while your still living there and pull out equity. Use the equity to buy the rental in both of your names and move there. That way you're getting owner-occ rates on both without being dishonest. You can keep your owner-occ rate on your re-fi even after you move. By perks, do you mean something like a first time home buyer's club? If so, remember those take almost a year. That could be fine for you though since it'll take time to re-fi. Make sure you can afford the re-fi payments without additional income.

Thanks for the reply, that is exactly what I was getting at. For the first time buyer, I was thinking in regards to being able to have minimal down-payment etc. I know you can't qualify for some of the special financing for a second home/rental so was trying to think how I should approach that. 

Hello @Stephen Melley , It sounds like you are in a good place and asking good questions. Since your soon to be wife has not had a home before make sure you ask about first time home purchase programs. (Can help with the down payment.) There are also a couple loan programs that can include remodel work. Many times these loans are not the best option. But I would ask the questions.

Let me know if you need any recommendations for mortgage brokers.

Happy Investing!

Phil Weiler

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