First and foremost thank you for anyone that takes the time to respond I would greatly appreciate it!
Here’s my backstory:
I'm currently active duty military living in Rhode Island. I own my current SF home and purchased it with a VA loan. In June of 2020 I leave the Navy and plan on moving to Charleston, SC in the fall of 2020.
I do not plan on selling my home in RI. I will be renting it out as I have a good amount of equity in the home along with a cash flow of $700/m if I were to rent it out.
I also own a condo that I use as a vacation rental on air BnB that I will be using a property management company to take care of when I move. Currently I manage myself. Even with property management costs, the cash flow is significant.
When I move to Charleston I will be purchasing a home using the VA loan again and with no money down. I have funding in place to also purchase a property to BRRRR. When I purchase the BRRRR and go to refinance, will the bank consider my rental income from my home in Rhode Island that would be rented at that time to cancel out that mortgage debt in terms of DTI? (RI home would be rented for a year at that point) I'm new to the BRRRR strategy and the biggest hurdle for me to grasp is the refinance part.
Sidenote* I am looking to network with anyone in Charleston area. I’d like to start connecting now and pick your brains if you don’t mind!
I believe it mostly depends on the lender. I have one who will consider rental income immediately, but I've heard of others who won't consider it at all for some amount of time - as long as 2 years! That seems nuts to me, but it's probably worth calling around to a few lenders to see if you can find one who will consider it immediately so you know you can move forward with that strategy.
@Clark Kirkpatrick that’s what I was reading. 2 years! I agree, that’s nuts. Thanks for your response.
Yes. And if a lender tells you different, you're working with the wrong lender.
TYFYS, and best of luck.
Yes, as long as your are claiming it on your taxes and not showing a large loss (aside from non-cash expenses such as depreciation).
Seeing that you already have management experience from your AirBnb, many lenders would also consider the income of your SFR even prior to 1 year, but will usually cap it to 75% of actual income.
No experience yet to offer, but a question.Are you a nuke? You say Navy and Charleston and that's my first thought. MMN1 (SS) here in central NC for recruiting duty currently.
@Lawrence Gillett nope not a nuke, lol. A lot of my friends have gone through the Nuke pipeline in Charleston though. I’m leaving the Navy and the Charleston area really appeals to my wife and I. Trying to escape the Northeast winters that have been a part of our lives forever. I’m an ETR2.
@Kyle Brodwater nice nice, i won't hold that against you... Much. lol. As im sure a lot of people do, I've got a few buddies in the area. One of my ex nukes is currently rocking the dependa life with his wife who's still in. He just got his realtor license, but i know he's huge on helping people, and investments was a huge topic on the used-ta-boat before he got out. I'm not down there but still definitely love the area and miss Mount Pleasant to death.
@Kyle Brodwater I am currently going through this process right now, AD stationed in Rhode Island. The work around from what I've discussed with my broker and she spoke with the head of underwriting, just got off the phone with her. Is that if you can provide a landlord certification stating that basically you know the ins and outs of being a landlord and can prove to be successful. The lender will sign off on utilizing the rent from the other unit. Hope this helps
@Bradley Scruggs that’s excellent to know. Thanks for the heads up!
@Bradley Scruggs sometimes a lender will also look favorably on new landlords taking some kind of class for first time landlords.
Rhode Island Housing is one such lender but their classes for landlords are actually done through Housing Network RI so I believe they’re open to the public.
Just be aware, of course, that when a class is free or very inexpensive, whoever is offering the class, paying for the staff and space, etc. may have a bias or agenda they push in exchange for the free or low cost class (in the case of RI Housing / Housing Network RI, they strongly encourage new landlords to enroll in HAP / Section 8).
There’s nothing inherently wrong with that, but it makes it easier if you know to expect that going in :)
Hi @Kyle Brodwater , I'm a wholesaler in the Charleston area. I'd love to connect and see how I can help you reach your investing goals in the Charleston area. Please feel free to message me if you have questions about the area.
@Keegan Beck excellent, thank you! The wife and I are looking to live on James Island, closest to Folly. I'd love to hear about certain areas you think are profitable BRRRR areas as well. Please message me anytime.
Typically you will need to show that the rental property is productive on two years of tax returns for it to be given consideration in the DTI ratio. In commercial loan servicing, they will account for the debt servicing.
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