All Forum Posts by: Adam Macias

@Jeremy England You can finance up to 10 properties in your name using conventional 30 year fixed mortgages.  In these forums there is a consistent theme to "call small local banks and credit unions" and that isnt bad advice.  In my  humble opinion, the more important attributes are a bank who understands investment properties and a loan officer who works regularly with investors.  You would wouldn't order Prime Rib from McDonalds just because it is 2 blocks from your house would you?

I also see a lot of investors on this site talk about issues with DTI when they get into multiple properties. There are situations where this is true but most of the time I am perplexed by this issue. if you are buying a rental property then the lender should be able to use proposed rental income when calculating your debt ratios. This is accomplished by the lender ordering a comparable rent schedule (form 1007) when they order the appraisal. The 1007 gives the lender a market rent for the area. An investor friendly lender should be open to using this proposed rent.

Let’s say you currently make $10,000/month w-2 income. You have an owner occupied mortgage payment of $3000. Car payments of $800/month and student loans of $900/month. This totals monthly debt of $4700. With a monthly income at $10,000 you are at a 47% ratio. No way you will qualify for an investment property mortgage. right?

Not so fast.

Let’s say this property you are purchasing will result in a $1000 monthly payment. Let’s also say that 1007 rest schedule form comes in with expected monthly rent of $2000/ month. Our approach is to hit the rent with a 75% vacany ratio which gives you expected monthly rent of $1500/month. We then deduct the $1000 mortgage payment from the rent and you end up with $500 in additional monthly income.

The awesome part is that the $1000 monthly payment is not counted against you at all because it is completely negated by the rent. The awesome-er part is that the $500 expected income can actually be used as qualifying income!

Debt ratio before rental purchase $4700/$10000 =47%

Debt ratio after rental purchase = $4700/$10,500=44.7%

Taking out a new $1000/month mortgage actually lowered your debt to income ratio!

Question: I am a beyond beginner trying to dig in to real estate to have a piece of the American pie for myself and my family.

I am trying to completely renovate my property in Los Angeles, how would I go about on how to finance my renovation?

Also, any tips on how I would qualify on the loan? (good credit?)

A HELOC is basically a 2nd mortgage on the house. And to qualify you will need to have equity in the home. Depending on the bank you use, most banks will loan up to 75% LTV of the house. But like in Derrick's example he has a bank that will do up to 95%.

Currently live downtown Columbus and have about $150k in equity in our house. We would like to move out to the country to get some land and a cheaper mortgage payment so we can invest in rentals. What advice do you have for doing this? Should we pay cash for a fixer upper in a smaller city- can buy a single family for around $90k, live in it while we fix it up and BRRRR, then buy our primary property? Or buy primary property first then find a BRRRR? Or, should we buy a multi-family or single family still in Columbus with the same idea?

We own zero rentals at this point. Brand newbie here. Have fixer upper experience with previous primary residences though. I will also be taking my real estate exam within the next week, so hopefully that will help as we start this journey. Thank you in advance! 

If you were to choose; to renovate  your existing house (complete knock down) to add more rooms and value to the house (with no additional doors to add to the property)? OR wait for the housing market correction and invest your money into buying another property? Can you give me some reason on why you pick it?

Thanks 2022.