Advice??

Question

So I recently purchased a "home" in Illinois, for me and my family with the VA loan, and I am renting it out until I finish my service which is 1 1/2 years in Salt Lake City, UT. By the end of the year I would like to have either my first flip, or my second buy and hold property under my belt. I have to advise, i do not have funds to support this but I will continue to gather and try anything within reason as necessary. I am just starting out I might add, but I am looking for any advice that would help me. any suggestions?

Thank You BP

Jesse Waters · Answer

Since you are moving around, you might want to look into house hacking with a tri or quad plex out in Salt Lake.  You should be able to get good terms and a low down payment, even if you have to pay some PMI.

Jesse Waters · Answer

When it comes to counting rental income by the banks I have run into two different scenarios.

1-The bank wants 12-24 months history before counting that income towards my income.  This happened when I converted my first town house from my primary residence to an investment property.  We bought it on a 0% down VA loan.  We had no equity in the property, so we had to gain the history to count income

2- The more common situation that I have, with higher down payments 25-30% the income that the bank expects the property to generate is counted towards my income.  Some time after appraisal & during underwriting they add what they expect the property to generate towards my income.  Basically, as long as the property meets my cash flow requirements I have satisfied the bank & they allow my debt limit (DTI stays the same) to increase for that purchase.  Simply-high down payment, allows it to count during underwriting.

Hope this helps.

Best of luck.

Brent Coombs · Answer

@Jerry Padilla Aah, just making sure you weren't trying to give @Jahmar Childs any naughty ideas...

Jerry Padilla · Answer

@Brent Coombs  many people don't realize that there are lenders out there that can count the rental income immediately. Many lenders require a two year history to include the rental income.

Brent Coombs · Answer

@Jerry Padilla Why wouldn't "the rental income from your property to count towards your income"?

I understand that it might not prevent @Jahmar Childs from applying for another VA Loan, but under what circumstance would the (net) income not be assessable (presuming it's a positive amount)? Just askin'. [No legal advice given]. Cheers...

Jesse Doyle · Answer

@Jahmar Childs

Quick question, witha  year and a half of service left, how were you able to use a VA loan for this deal. To my knowledge the property would have to be your primary residence? With the property i am in the process of buying the bank said they cannot do the VA unless i lived in the house for X amount fo months the year i get the loan.

Jerry Padilla · Answer

@Jahmar Childs

You can use the rental income from your property to count towards your income as well, along with the new investment properties income. If the property isn't reflected on your income taxes than 75% of the lease agreements or projected income are used. If they are reflected on your taxes than the net income is used.

Jahmar Childs · Answer

Wow thank you @Quintin Mortensen and @Jerry W.  for the heads up and information. I will definitely be on the look out for more of these.

Quintin Mortensen · Answer

Hey Jahmar,

Owner financed is when the person selling the place (current owner) acts as the bank and finances the deal for you. On the plus side you are working with one owner instead of a bank so the financing is a little different but you pay for it with higher down payments and interest rates. Here is a listing for a cabin that is offered for owner financing: http://www.ksl.com/index.php?nid=218&ad=33545308&c...

This probably isn't a good investment deal but you can get an idea of how it works.

If you have any other questions, feel free to reach out to me!

Jahmar Childs · Answer

@JerryW. what do you mean owner financed?  Would it be better to go all in wheen I get out in a year?  I would like to get started as soon as possible on the right track to reach my goals.

Advice??

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