Updated 3 months ago on . Most recent reply
First-timer financing question
Hi folks, I'm heavily leaning towards purchasing my first investment which will be a single family/duplex for a hold long-term and rent-out approach. I have a first mortgage on my primary residence and took out a fixed home equity loan a couple of years back for a life event (wen through divorce, bought ex out of family home). My combined LTV is around 60% and my DTI is probably right around 40%.
Does my financial position prohibit me from obtaining a conventional mortgage (I can put down 20% for my target market)? Does it change if I have an LLC and pursue a conventional mortgage that was versus as an individual? I know there are other financing options out there, but don't know enough yet to comment intelligently so all advice and perspectives are appreciated.
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@Graham Kim Be aware that in many “affordable” markets you are getting what you pay for. Often they are C or D markets and you will have a really hard time finding good tenants.
Unfortunately I just placed my first bad set of tenants this past year. Had a solid 6 year run of great tenants prior to doing so. Am in the middle of my first eviction now and down $8000 in rent that is in arrears.
The court clerk told me today I could go after the back rent but that it was more complicated and perhaps I just wanted to be done with it ASAP. Had to go to work and haven’t had a chance to look at the paperwork to decide.
If you already have sizable debt on your home how well will you be able to potentially sustain a hit or hits like my $8000 eviction?
One thing I’ve been happy about as I go along my investment journey is that I have no debt on my primary home. It makes a big difference.