Loan strategy problem. Which option sets me up for more deals?
Hi all.
I just sold my condo and am aiming to buy 4 rental properties in the next 12 months using the proceeds. My problem is my DTI as my pay is pretty horrible, and I'm struggling to see a way through. I don't have enough capital to buy something outright (and am missin out on the great deals on MLS) and need loans, but i do have enough cash for rehab and downpayment.
Today I have my first property all but under contract (REO bank addendums are slowing things down but I have accepted their counter offer. They are waiting for eanest money before signing...) Not a slam dunk but promising. 146k with about 13k rehab needed (its in good shape) ARV 180K and in a great neighborhood. Effective date is today so I have 7 days to source a loan. I had a couple options already lined up -
1. Owner occupied: 5% primary with Mortgage Insurance and then house hack with roommates. (PRO: lowest cash invested CON: high payments and no landlord track record being built)
2. Investment: 20% minimum down. PRO: keep payments low and gets me in the game. Also no mortgage insurance. Also 70% of rent collected counted immediately as income for DTI purposes when rented with a lease (*Quicken loans) BUT very High cash invested and locked up (49K)
I'm struggling to choose the best option based on future needs. It seems the investor option is best but it ties up so much capital. I'm going to struggle with a 2nd property.
How do I choose the best strategy to get in the game and still be able to tee up the next 3 purchases with crappy income?
I'd appreciate your thoughts.
Thanks Kelvin