I’m currently in the process of purchasing a 3 family home with a fha Loan. I was approved pending appraisal everything was all set until the appraisal came back with the below market values for the rental income and now I’m short 150$ on rental income a month and my lender is telling me I can’t move forward because of this. I really don’t want to lose out on this house over 150$. Co-signing is not an option for me nor is paying down debt because I already paid it off. Any other suggestions I can do? Or ideas?
Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
6y
@Dominique Long Can you negotiate a lower purchase price? The current list price does not justify that the property is worth what you are willing to pay for.
Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
6y
@Dominique Long Can you negotiate a lower purchase price? The current list price does not justify that the property is worth what you are willing to pay for.
It's time to look into other financing options, is there a conventional program that you can get into? Do you qualify for any down payment assistance programs that will bring your mortgage down? Will an small second from the owner get you there? Are the units vacant and that is why you had to use an appraisal for rent rates? Can you get a lease signed for a tenant that is $150 a month more than what the appraisal came back? Will a break from your Realtor on commissions help make the deal work, what about seller concessions? A lot of people have a lot riding on getting this deal closed so start asking them for their thoughts. The seller, your Realtor, the seller's Realtor, and the mortgage broker don't get paid unless this deal closes so don't be afraid to reach out.
The other thing you need to question is whether this deal still makes sense if the appraiser's numbers are more accurate than yours. Are you going to be able to swing the payments if the rent is $150 a month less? Will you still cash flow? This would be a great time to evaluate all of your assumptions and make sure that the purchase of this property is your best move.
Thank you so much!! Lots of different options there. The one that stood out to me is raising the rent 150$ because I suggested that to my lender also. I think I will look more into that because I was going to raise the rent by 150$ anyways when I moved in. I don’t know who would have to update or create a new lease me or the current seller since I’m technically not the owner yet? I think I will suggest that to the sellers agent. Awesome suggestions thank you!
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Dominique Long does the unit you're moving into have more than one bedroom? Rent that bedroom out for x a month to meet your income requirements for the property! It's along the same lines as what you mentioned as far as raising rents, but because you will likley have to honor leases that are in place, the income that will come from your unit might be the only thing you have control over at first. Good luck!!