Second home loan from Navy Federal FCU
Member since 2022 · 12 posts · 15 votes
My wife and I currently own two short term rentals in Tucson, AZ. Both were bought as investment properties using conventional mortgages and 20% down. Navy Federal, who I bank with, has a second home mortgage with as little as 5% down and no PMI that allows rental of the property when not being occupied by the owner. But all income from the rental is taxable (normal), and income from the property cannot be used for qualifying for the mortgage or subsequent mortgages. We'd like to expand our portfolio.
Does this look a viable option to acquiring another property? Thanks in advance
@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.
Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify. We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases. Short Term Rentals (STRs), owner financing, etc. are handled differently. So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender. Since we only buy properties that cash flow, I should look BETTER with each property I purchase. At least, that's how it should work in concept.
So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year. If you are occupying it part of the year, then you cannot rent it out for 12 months. Does that make sense how I am saying all of this? Hit me back if you were talking about something else. Here to help. Thanks!
They actually require 10% down and no PMI
@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.
Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify. We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases. Short Term Rentals (STRs), owner financing, etc. are handled differently. So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender. Since we only buy properties that cash flow, I should look BETTER with each property I purchase. At least, that's how it should work in concept.
So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year. If you are occupying it part of the year, then you cannot rent it out for 12 months. Does that make sense how I am saying all of this? Hit me back if you were talking about something else. Here to help. Thanks!
@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.
Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify. We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases. Short Term Rentals (STRs), owner financing, etc. are handled differently. So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender. Since we only buy properties that cash flow, I should look BETTER with each property I purchase. At least, that's how it should work in concept.
So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year. If you are occupying it part of the year, then you cannot rent it out for 12 months. Does that make sense how I am saying all of this? Hit me back if you were talking about something else. Here to help. Thanks!
Hi Tom,
10% down with no PMI is a great deal. You are correct that you cannot use the income from that STR property to help you qualify for the 2nd home loan, BUT once you fill taxes after a year, you can use that income to help you qualify for your next properties. All in all it is still a win.
@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.
Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify. We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases. Short Term Rentals (STRs), owner financing, etc. are handled differently. So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender. Since we only buy properties that cash flow, I should look BETTER with each property I purchase. At least, that's how it should work in concept.
So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year. If you are occupying it part of the year, then you cannot rent it out for 12 months. Does that make sense how I am saying all of this? Hit me back if you were talking about something else. Here to help. Thanks!
@Tom Albares I think I'm tracking with what you are asking...but if I'm off let me know.
Whenever we buy another rental property, we should always work with a lender that will use the rental income of that property to help me qualify. We are working under the assumption that these are rental properties that are used in a traditional sense - meaning, 12 months leases. Short Term Rentals (STRs), owner financing, etc. are handled differently. So as long as they are rented, I should get credit for that income. Otherwise, I will eventually hit a wall and NOT be able to qualify for anything with that lender. Since we only buy properties that cash flow, I should look BETTER with each property I purchase. At least, that's how it should work in concept.
So for a 2nd property, you cannot use income from that home to help you qualify....since you are occupying it part of the year. If you are occupying it part of the year, then you cannot rent it out for 12 months. Does that make sense how I am saying all of this? Hit me back if you were talking about something else. Here to help. Thanks!
@Tom Albares You might be looking at your situation too narrowly. If you are making good money on your 2 current investment properties, have a good down payment saved up (hopefully from those investment properties), and have a favorable lending profile, most lenders can find a way to help you grow your portfolio even more. You make money and they make money.
As an example, I just helped a corporate executive purchase his THIRD investment property over a 6 month period and the only requirement the lender had was confirmation that each property was filled with a renter before giving the green light on the next one. He was veteran but did not go with USAA or similar institution as they typically focus on primary residences and not investment properties
Sounds like some good lenders have already chimed in, recommend you interview at least 3, see which one gets you and your goals and move forward. Let me know if you need any investor friendly lenders that are local to Tucson.
@Tom Albares You might be looking at your situation too narrowly. If you are making good money on your 2 current investment properties, have a good down payment saved up (hopefully from those investment properties), and have a favorable lending profile, most lenders can find a way to help you grow your portfolio even more. You make money and they make money.
As an example, I just helped a corporate executive purchase his THIRD investment property over a 6 month period and the only requirement the lender had was confirmation that each property was filled with a renter before giving the green light on the next one. He was veteran but did not go with USAA or similar institution as they typically focus on primary residences and not investment properties
Sounds like some good lenders have already chimed in, recommend you interview at least 3, see which one gets you and your goals and move forward. Let me know if you need any investor friendly lenders that are local to Tucson.
Hey Eric, could I take you up on that offer? I live in Texas but I'm looking to purchase a second home in Tucson. My goal is to convert the home into a short-term rental. Could you share some investor-friendly lenders with me? Also, I'll need an experienced, local agent to help me through the homebuying process in Tucson. If you're knowledgeable and experienced in the Tucson area, I'd love to connect.
@Tom Albares You might be looking at your situation too narrowly. If you are making good money on your 2 current investment properties, have a good down payment saved up (hopefully from those investment properties), and have a favorable lending profile, most lenders can find a way to help you grow your portfolio even more. You make money and they make money.
As an example, I just helped a corporate executive purchase his THIRD investment property over a 6 month period and the only requirement the lender had was confirmation that each property was filled with a renter before giving the green light on the next one. He was veteran but did not go with USAA or similar institution as they typically focus on primary residences and not investment properties
Sounds like some good lenders have already chimed in, recommend you interview at least 3, see which one gets you and your goals and move forward. Let me know if you need any investor friendly lenders that are local to Tucson.
Hey Eric, could I take you up on that offer? I live in Texas but I'm looking to purchase a second home in Tucson. My goal is to convert the home into a short-term rental. Could you share some investor-friendly lenders with me? Also, I'll need an experienced, local agent to help me through the homebuying process in Tucson. If you're knowledgeable and experienced in the Tucson area, I'd love to connect.
Hey JD! I am a local Tucson agent and investor... What are you looking for? Small multi or SFH?
@Tom Albares You might be looking at your situation too narrowly. If you are making good money on your 2 current investment properties, have a good down payment saved up (hopefully from those investment properties), and have a favorable lending profile, most lenders can find a way to help you grow your portfolio even more. You make money and they make money.
As an example, I just helped a corporate executive purchase his THIRD investment property over a 6 month period and the only requirement the lender had was confirmation that each property was filled with a renter before giving the green light on the next one. He was veteran but did not go with USAA or similar institution as they typically focus on primary residences and not investment properties
Sounds like some good lenders have already chimed in, recommend you interview at least 3, see which one gets you and your goals and move forward. Let me know if you need any investor friendly lenders that are local to Tucson.
Hey Eric, could I take you up on that offer? I live in Texas but I'm looking to purchase a second home in Tucson. My goal is to convert the home into a short-term rental. Could you share some investor-friendly lenders with me? Also, I'll need an experienced, local agent to help me through the homebuying process in Tucson. If you're knowledgeable and experienced in the Tucson area, I'd love to connect.
Tom, JD and Cade, I'd be happy to let you know what terms are available for this type of deal. Even though I am in Florida, we service all 50 states and partner with 200+ lenders for all types of investments.