I recently decided to get into real estate investing and step number one is to “house-hack” my way into land lording. My wife and I are looking to purchase a multi-family home, either a duplex or a single family with an accessory dwelling unit (sometimes called a mother-in-law apartment). The problem I’m having is I short sold my house in November of 2012 and as such am unable to obtain any conventional loans. I can walk through the entire story of why I short sold if the users here think it would add value, but what I’m looking for is advise on where I can turn to obtain financing.
To be clear, I have 20% available for a down payment on most of the properties I’m looking at here in Seattle, WA. I have a good job that I earn a strong ordinary income from; in addition my credit score is already back above 720. I’ve been speaking with a broker who says they offer a “fresh start” program – but the interest rate is over 7.5%. So where do I go now? What are the avenues I should be searching to gain access to funding?
That fresh start sounds kind of stale to me. Treat broker shopping like contractor shopping. No less than three bids.
@Steven Britton My suspicion is that a short sale is listed as an adverse item on credit report. If that's the case, then the adverse item will be on the report for 7 years. A short sale simply means higher risk to a lender, so lenders will charge higher interest. But like Tim says, try other mortgage brokers and see what is available.
From where I'm from 7.5% is not a bad interest rate; maybe just look for MF deals where the return would be better than 7.5% CoC if all units were rented out, also working out if your own rent would be better spent staying where you are, or occupying one of your own units and foregoing that part of the rent return? But by all means, keep shopping around for a more friendly Lender. Cheers...
The short sale will show for 7 years correct; I'm told and I can't get a conventional loan until 4 years after the sale. I guess I'll have to consider the 7.5%; I just thought I could do better with private money or selling financing. I'll keep looking.
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